Mortgage fees and charges

Aside from your mortgage, there are a number of other costs involved in buying a home. But you can avoid or reduce them, if you are prepared to shop around.

  • Administration fee – Some lenders charge this fee to cover additional services before you receive your mortgage. You may also be charged this fee for rearranging the terms of your mortgage. You may not get your money back if you do not go ahead with your mortgage application
  • Arrangement fee – Some lenders charge a fee to arrange the loan. This can be around 0.5% of the total cost of the mortgage
  • Brokers’ fees – Some brokers charge a fee to give you mortgage advice or to arrange your mortgage. Many brokers do not charge a fee so it’s worthwhile checking in advance
  • Estate Agents’ fees – If you are selling your home, you will have to pay fees if you hire an estate agent to handle the sale. You will usually have to pay between 1% and 2% of the sale price or sometimes there is a flat fee
  • Solicitor’s fees – Many solicitors charge a percentage normally 1% of the mortgage amount to look after the legal aspects of your mortgage
  • Indemnity Bond – An indemnity bond is a type of insurance policy that can be taken out by a lender when they give you a mortgage. The policy insures the lender against making a loss if they repossess your property and the house is worth less than the outstanding amount of the mortgage. It usually applies to larger mortgages where there is very little equity from the start. Many lenders waive this charge
  • Structural survey fee – This pays for a structural survey to find out the condition of the property you want to buy. If issues were raised during the valuation of the property, or if it is very old, your lender may insist you get a structural survey. You may also want to get a survey done to satisfy yourself that there are no problems with the property

There are other costs you need to consider when working out how much you can afford to borrow.

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