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Mortgage Fees
Mortgage lenders add several charges and these can actually run into thousands of pounds.
At one time fees amounted to around £300 now they are much more expensive. They can now range from £1,000 to £2,000. All fees were increased in July some by as much as £1,000.
One of the reasons for the increase is the low interest rate some lenders are offering. One lender has a product for 5.28% but this comes with a £5,250 fee. Another has a product at 6.24% with no fee. Obviously this is the better option unless the mortgage is over £250,000.
Some lenders offer fee free mortgages but often the rates are raised before the offer goes out.
After the arrangement fee comes a possible booking fee these often come with a fixed rate mortgage and can add a further few hundred pounds to the cost.
Many lenders add a higher lending charge to borrowers who borrow 90% plus of the property value as they are considered to be a high risk. Those with only a small deposit also come into this category. These fees have continued to be charged even though repossessions have been very low.
Valuations constitute another fee, there are three types of valuation, a basic valuation, which most people make do with and will cost around £200 - £300. There is a homebuyers report and a full structural survey.
A homebuyers report will cost between £250 and £500 but although a full structural report would cost far more it maybe worth it in the long run.
Legal fees add more money to the ever-increasing total. These include searches for planning issues, flooding, mining or contaminated land. Also included would be the cost of drawing up contracts.
Stamp Duty has to be paid at a rate of 1% on property from £120,000 to £250,000 and 3% from £250,000 to £500,000 whereby it rises to 4%. So a £250,000 property would therefore cost £7,500.
Lenders may impose early repayments fees if the mortgage is paid up before the end of term. These fees can vary greatly depending on what type of mortgage it is and of course which lender is used. Some charges shrink as the year’s progress.
Exit fees are now charged and borrowers are advised to ask about all these fees before signing contracts.
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