So, the good news is Mortgage of Choice does not charge a broker fee. The not so good news is that taking out a mortgage can incur a variety of other fees and costs which are summarised below. Mortgage of Choice will work on your behalf to match the most cost effective product solution with your needs.
Product Related Fees / Charges
Lender Booking Fee
Generally this is most applicable to Fixed Rate products where the lender charges a fee for ‘booking’ your requested loan funds from the overall tranche of money allocated to that particular product. Be aware this fee may require payment upfront with the mortgage application and generally is non-refundable.
Lender Arrangement Fee
A fee charged by the lender for the administration of setting up the mortgage.
This fee has been increasing of late and very often is now charged as a percentage of the loan amount. Lenders generally offer the option to build this fee into the loan but be aware that interest is then charged on that amount for as long as it remains part of the borrowing. More than ever, a good broker is vital to closely scrutinise rates versus fees to find which product offers best value.
Higher Lending Charge (HLC)
Formerly known as the Mortgage Indemnity Guarantee or MIG this is a one-off insurance premium charged to the borrowers by a significant number of lenders, usually where borrowing exceeds 90% of a property’s value. The premium pays for the lender to insure against potential losses should they have to repossess the property and sell it for less than the outstanding mortgage. Be aware that the insurance protects the mortgage lender, not the borrower and the insurance provider retains the right to pursue the defaulting borrower for any loss made as a result of the lender’s claim on the policy.
Mortgage Redemption / Release / Sealing Fee
An administration fee charged by your current lender (if applicable) for closing the mortgage down and releasing the title deeds if new borrowing is with a different lender. This fee can vary from £90 to £295 depending on the lender and is applicable even though your current Early Repayment Charge (ERC) has ended.
Property Related Fees
Valuations and surveys
When you apply to take out a mortgage on a property, the lender must determine the value of the property to ensure it offers good security for the loan being advanced. There are three levels of valuation or survey:
1. Basic or Standard Valuation
It is important to note that this level of valuation, though paid for by the borrower, is carried out entirely on behalf of the lender. The report is as stated – basic, and in offering to advance funds all lenders make a disclaimer regarding the condition of the property ie you have no comeback against the lender (or surveyor) should you subsequently find defects or run into problems.
2. Homebuyers’ Report
This is a more detailed but still limited report which follows a set format referencing the readily accessible parts of the property. As the surveyor is acting on your behalf rather than the lenders’ you hold the right to discuss in more depth any points raised in the report. There is some limited recourse in the event of negligence on the part of the surveyor.
3.Full Structural Survey
This is the most in depth report and the most costly. If a property holds major defects it is expected that a full structural survey will discover them, failure to do so would give rise to legal liability on the part of the surveyor.
- It is important to note that with any level of survey, the surveyor may recommend additional specialist reports to fully determine the extent of a known or potential defect. These costs are in addition to that of the initial survey. A homebuyers report and full structural survey will take the form of a signed contract with the surveyor and denote his / her remit and responsibilities therein.
- Be aware that mortgage lenders instruct surveyors who form part of an approved panel and it is always best to discuss your requirements with your broker or lender before committing to the cost of your own survey. It is frustrating and expensive to find a survey must be carried out again by a surveyor ‘known’ to the lender.
Legal Fees
With a property purchase the legal costs will comprise of two main elements:
1. Your appointed solicitor’s fee for their work + VAT
2. Disbursements:
Stamp Duty Land Tax , Searches, Land Registry Fee, Telegraphic Transfers etc. VAT is currently not applicable.
On Remortgages some lender products come with incentives like free basic valuation and free standard legal work (non standards such as adding or removing names from the mortgage will incur extra costs).