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A guide to mortgage costs and fees

The number of fees and costs associated with buying a house can be overwhelming. We’ll help you tick the right boxes and budget accordingly to make your mortgage experience a positive one.

The number of fees and costs associated with buying a house can be overwhelming. We’ll help you tick the right boxes and budget accordingly to make your mortgage experience a positive one.

Written by
Alex Hasty
Insurance comparison and finance expert
Last Updated
29 FEBRUARY 2024
8 min read
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What do mortgage fees include?

To help you budget with confidence when buying a house, we’ve put together a list of additional mortgage costs you need to think about. Some are charged when you set up the loan, others come up during the life of the mortgage.

Deposit: a minimum of 5%-10%

Typically, the larger the deposit you can afford, the more money you’ll save in the long term. If you have a generous deposit, you’ll reduce the size of the mortgage you need as well as the interest you pay. 

A smaller mortgage means less risk for you and your lender, which also increases your chances of getting a better deal.

With 95% mortgages now available, deposits can be just 5% – a more affordable option that’s particularly popular with first-time buyers looking to get on the property ladder. 

Read our guide on how to save for a mortgage deposit.

Mortgage broker fee: £0 to £500

A mortgage broker does the legwork when it comes to finding the right mortgage deal for you. They know the market well and, if you’re new to house buying, self-employed or in unusual circumstances, they can be a reassuring and helpful presence.

Some mortgage brokers offer a fee-free service; others take a commission from the mortgage provider instead. But if they do charge, you can still usually have an initial chat for free.

We’ve partnered with London & Country Mortgages Ltd (L&C)** to provide you with fee-free mortgage advice.

The alternative to using a broker is to go direct to a mortgage lender after comparing prices online – for example, by using our mortgage comparison service

If you go direct, you’ll still get the same regulated financial advice that you would with a broker. Some lenders offer support and guidance on their websites too.

About London & Country Mortgages Ltd (L&C)

**London & Country Mortgages Ltd (L&C) are a multi-award-winning mortgage broker with over 20 years’ experience in helping people secure their perfect mortgage. Advice is provided by L&C, who are authorised and regulated by the Financial Conduct Authority (143002).

L&C are not part of Compare the Market Limited. Compare the Market receive a % of the commission that our partner London & Country earns. All applications are subject to lending and eligibility criteria.

L&C will not charge you a broker fee should you decide to proceed with a mortgage.

Mortgage arrangement fee: £1,000-£2,000, but varies based on property value

This is a charge for setting up your mortgage. You might also see it referred to as the application fee, completion fee or product fee.

You’ll usually have the choice of adding the arrangement fee to your mortgage – but that does mean you’ll pay interest on it – or paying the fee upfront. If you pay upfront, there’s a chance you’ll lose the money if the house purchase doesn’t go ahead.

An alternative is to add the fee to your mortgage, but to overpay as soon as your mortgage deal is completed to avoid paying interest on it. Most lenders allow you to overpay by a certain amount each year without incurring a penalty – but check the small print.

Mortgage booking fee: up to £300

The booking fee is typically paid when you submit your mortgage application to secure the rate – although some lenders include it in the arrangement fee.

It’s usually non-refundable, even if the property sale falls through and the mortgage is no longer needed.

Valuation fee: £0-£1,500, but varies based on property value

Before approving your mortgage, a lender organises a survey of the property you want to buy to assess its value. This is to ensure that, if you default on the loan, the lender can sell the property and get their money back. This may or may not be a cost passed on to you.

The lender’s survey only looks at the property value, not necessarily any potential problems and future costs. You can pay for your own property survey (see below), which provides you with more detailed information about the property and identifies any repairs or maintenance that might be needed.

In Scotland the process is different. The seller must provide a Home Report, which includes a valuation, before a property can go on the market.

Survey: £400-£1,500, depending on the type of survey

A survey is not a legal requirement, but it will flag issues that could cost you later. If serious repairs are brought to light, you might be able to renegotiate the property price with the seller.

You can commission a survey yourself or your lender may be able to arrange it for you.

The type of survey you’ll need largely depends on the age and condition of the property.

  • RICS condition report – the most basic and cheapest survey. Suitable for a conventional house, flat or bungalow built from common building materials, which is in reasonable condition.
  • RICS homebuyer report – a more detailed report that will flag up any key issues that may need attention. It will also give you the rebuild value for home insurance purposes.
  • RICS building survey – the most comprehensive and expensive. Best for listed buildings, non-standard properties and older houses in poor condition.

Telegraphic transfer fee: around £25-£50

Also known as CHAPS (Clearing House Automated Payment System), this is a bank charge to cover the cost of transferring the large amount of money used to buy the property to the seller’s solicitor. It’s typically non-refundable.

Mortgage account fee: around £100-£300

This covers your lender’s administration costs for setting up, maintaining and closing your mortgage. It’s typically charged at the start or end of the mortgage term.

If you’ve paid the mortgage account fee, you probably won’t have to pay an exit fee (see below), although an early repayment charge may apply if you pay off your mortgage ahead of time.

Conveyancing and legal costs: up to £2,300

Conveyancing is the process of legally registering you as the new owner of the property. It’s carried out by a solicitor, who can also deal with other documents, such as those relating to environmental factors and planning permission.

You should check whether the price quoted by the solicitor includes VAT, search fees and Land Registry fees. Legal fees for leasehold properties are likely to be more than for their freehold equivalent.

Your lender may cover these legal costs if you’re remortgaging, although you’ll probably have to use one of their chosen solicitors. Otherwise, you’ll have to pay this fee yourself.

The final price is determined by the value of the property and the location: for example, extra searches may be needed if the property is near a river.

Stamp Duty: 0%-12% depending on property price

Stamp Duty Land Tax (SDLT) only applies to properties over £250,000.

Current Stamp Duty rates for buying a residential property are:

  • Up to £250,000: zero
  • £250,001-£925,000:  5%
  • £925,000-£1.5 million:  10%
  • Over £1.5 million:  12%

If you’re a first-time buyer, SDLT will only apply if the property you’re buying costs more than £425,000. You’ll pay 5% on the portion of the property price from £425,001-£625,000. 

Use our Stamp Duty calculator to work out how much Stamp Duty you may need to pay, based on the price of your property.

Land Registry fees: £20-£830

This charge covers the cost of registering your property to you on the Land Registry in England and Wales.

The amount you pay depends on the value of your property and it may be included in the fee charged by your solicitor.

In Scotland, there’s also a title registration fee to pay.

Higher lending charge (HLC) – up to 8% of the mortgage value 

This is, effectively, insurance to protect your mortgage provider against losses if you default on your mortgage repayments and the property is repossessed and sold at a loss.

It applies to high loan-to-value (LTV) mortgages – loans that carry a higher risk to the mortgage provider because the deposit is smaller.

The amount that’s charged varies, but ranges from 1.5% to 8% of the mortgage value. The charge is usually paid on completion but may be added to the mortgage balance. The money should be refunded if you decide not to go ahead with the mortgage.

Mortgage fees and charges after completion

Even after completion there may be extra charges and fees to consider:

Missed payment and arrears fees: £22-£35

If you miss payments on your mortgage, an arrears fee will probably apply – unless there are mitigating circumstances.

Fees vary among lenders and are charged on a monthly basis.

If you fail to meet your mortgage repayments, your home could be repossessed.

Early repayment charges (ERC): around 1%-5% of the loan

If you pay off your mortgage in full before the deal ends, or you overpay beyond your annual allowance, you may be faced with an early repayment charge.

Most lenders allow you to overpay by 10% every year without a penalty, but check the small print as it may be higher or lower.

ERCs sometime reduce over time. For example: from 5% to 1% over the course of a five-year deal. Again, check your mortgage deal to confirm.

Exit fee: £50-£300

When you finally repay your mortgage, an exit or closure fee could apply – unless it’s included in your mortgage account fee.

You may also be charged an exit fee if you switch to another lender or remortgage to a new deal with the same lender.

Frequently asked questions

What insurance do I need for a mortgage?

While it’s not a legal requirement, your lender will usually insist that you have buildings insurance for the length of your mortgage. Buildings insurance can cover the the cost of repairing or rebuilding your home after damage to its structure, such as the roof, walls or floors.

You’ll need to have buildings insurance in place on the date you exchange contracts.

You might also want to consider mortgage protection insurance. This can help cover your repayments if you lose your job or become unwell and can’t work.

Will the costs be the same every time I move?

Some of the costs listed above will be applicable each time you move, while others might not. When taking out a mortgage, you may be advised by the lender that some of the fees we list above can be added to the mortgage. Be aware, though, that this will increase your debt and you’ll have to pay interest on the fees.

Do I need to pay fees if I’m porting a mortgage?

You may need to pay certain fees when porting your mortgage to another property. These include valuation and legal fees related to your new home. You may also need to pay a small transfer fee.

Check with your lender first, so you know what fees are involved before you decide to port your mortgage.

Do I need to pay fees if I’m remortgaging?

There are usually fees to pay if you remortgage to a new lender. If you remortgage during your existing deal, you may be charged an early repayment charge and/or exit fee by your existing lender.

You’ll also need to factor in valuation, booking and arrangement fees to your new lender, as well as the usual legal fees.

The content written in this article is for information purposes only and should not be taken as financial advice. If you require support on the products discussed here, please speak to your bank/lender or seek the advice of an independent professional financial advisor. We also have more information on our Customer Support Hub.

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Alex Hasty - Insurance comparison and finance expert

At Compare the Market, Alex has had roles as Commercial Associate Director, Director of Trading and Director of Growth. He’s currently responsible for the development and execution of Comparethemarket’s longer-term strategic options, ensuring the right breadth of products and services that meet customer needs.

Learn more about Alex

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