It isn’t just about rates. When looking at mortgages it is important to consider all mortgage fees, other associated fees, incentives and the small print. This is what we do for our clients, and this is what sets our advice and guidance apart from the rest. In this blog, we will go through some of the hidden fees that often come hand in hand with mortgages, what they mean, and whether or not they are worth paying.
Hidden Mortgage Fees You Need To Consider
If you decide to do your own mortgage and property research without the help of a professional, you may be subjected to hidden costs that you weren’t aware of. Most comparison sites will consider a mortgage rate and the associated product fee, but not much more than that. So to the untrained eye, a mortgage deal may rank the highest by rate, but may cost you much more than you anticipated.
When it comes to product fees, lenders generally offer lower rates with a product fee of £999 – £1,999 associated with them (which can be added to the loan). Or some will offer a higher rate with lower or no product fee at all. A mortgage broker will carefully consider how much you will be paying in interest and how much the product fees are and make an educated recommendation for you based on this. Their opinion and recommendation will always be geared to benefit you the most financially.
Valuation Fees & Other Incentives
The next thing to consider is valuation fees, and any other freebies or incentives such as free legals, a free basic valuation or cashback. Most properties will need to go through a valuation before a lender will consider lending on it. This is to protect the bank and to make sure that the property is not going to visibly lose money.
Some lenders will offer free valuation and others will not. Again, your mortgage advisor will help you to chose a product that benefits you most, whether that is paying for an independent valuation yourself or choosing a product that comes with free valuations. Either way, you need to consider these potential costs which aren’t always considered. The same goes for free legals and conveyancing. We have recently written an article about free legals which you can read here.
There are plenty more costs involved with mortgages, and small print that also need to be considered. Tie in penalties are the main ones that are often overlooked – these can be up to 5% of the mortgage balance! So if you want to be able to move home, renegotiate your mortgage product or rate, or pay off the mortgage in the next few years please keep this in mind.
Other fees can be imposed if the below is required:
- Valuation admin fee
- Change of parties administration fee = lender’s fee for adding or removing someone (a ‘party’) from the mortgage.
- Partial release of property = Payable if you want to remove part of the property or land from the mortgage. It covers administration costs, including sealing the relevant legal deed and issuing letters of consent.
- Unpaid/returned direct debit or cheque
- Security alteration
- Re-inspection fee
- Change of mortgage term
- Change of repayment method fee, e.g. Transferring all or part of your mortgage from a repayment to an interest-only basis.
- Consent to let – If you want to let your property but don’t have a buy-to-let mortgage, you’ll pay this for each ‘consent to let’ agreement, where they agree to you letting out your property for a set period within your existing owner-occupier mortgage.
- If you don’t pay your ground rent or service charge = If your landlord writes to they lender to tell them you haven’t paid your ground rent or service charge and they have to act on your behalf, they’ll charge you for it.
- Giving a reference
- 2nd charge questionnaire/consent to 2nd charge
- Postponement of 2nd charge
- Second duplicate statement
- Mortgage exit fee
All of the lenders have different charges for the above and all need to be carefully considered by your mortgage advisor. As we all know, lenders love to advertise headline rates, but it is important to consider so much more than that. In a world of adverts, social media, google and AI it is important to get professional and independent advice.
If you or anyone you know is looking for some mortgage advice, speak to the experts. Our advisors at Oportfolio are here to help. Simply give us a call or send us a quick email and we will get back to you right away.