Third-party mortgage fees explained
When you’re buying a property and taking out a mortgage, it’s easy to get caught up thinking about the mortgage payments and interest rates.
But there’s a whole host of additional third-party fees that can also add up. It’s crucial to understand and budget for these extra costs from the outset.
We’ve created a mini guide below listing the most common third-party fees you’re likely to encounter.
The Arrangement Fee
Lenders charge this upfront fee (often called a product fee) for setting up your mortgage deal. It can be a big sum, typically between £500 to £2,000.
You can either pay it upfront or add it to your mortgage balance. Adding it to the mortgage means paying interest on it over the full term, but if you decide to pay the arrangement fee upfront (not adding it to your mortgage) you can still obtain the fee back if the mortgage doesn’t go through.
Top Tip – watch out for ultra-low mortgage rates with sky-high arrangement fees.
Solicitor's Fees
Whether buying or selling, you’ll need a solicitor or conveyancer to handle the legal work. Their fees cover things like property searches, title checks and transferring ownership.
Costs can vary a lot depending on the solicitor and how complex the transaction is. It pays to shop around and compare a few different quotes.
Conveyancing Fees
On top of solicitor’s fees, you’ll need to pay conveyancing fees to cover the admin work of transferring ownership. These costs depend on your solicitor and how complex the transaction is.
Stamp Duty Land Tax
If you’re buying a property in England or Northern Ireland, you’ll need to pay Stamp Duty Land Tax. The amount owed depends on the purchase price and whether you’re a first-time buyer.
First-time buyers may qualify for relief on properties below a certain threshold.
Use our official Stamp Duty calculator to work out how much you’ll pay
Survey Costs
A professional property survey is crucial for uncovering hidden problems before you buy. There are different survey options, from a basic valuation up to a full structural survey for older homes.
More comprehensive surveys give you greater peace of mind but cost more. For an older property, it’s usually worth paying extra for a full structural survey.
Read our guide to types of house surveys blog to learn more.
Valuation Fees
Your lender will want to value the property to ensure it’s suitable for the mortgage loan. Valuation fees can range from a free valuation to over £1,000 for larger properties and this will depend on the mortgage product.
Other Costs to Consider
There are a few more potential third-party costs to keep in mind:
- Mortgage broker fees – Other brokers often charge a fee for their services. If you use Newhomes, we’ll provide 100% fee-free mortgage advice.
- Credit report fees – In some circumstances, lenders may want to see a copy of your full credit report. Read our blog on how to improve your credit score.
- Home inspection fees – Depending on the property and lender requirements, you might need to pay for specialist inspections like a damp survey.
- Title insurance – Some lenders require this insurance (around £200) to protect against any issues with the property’s legal ownership.
There are many third-party costs to factor in when budgeting for a mortgage.
The last thing you want is to be caught out by unexpected fees further down the line.
The key is to research all the potential costs upfront and make sure you’ve budgeted enough.
It’s also wise to speak to our expert mortgage advisers who can ensure you understand the full costs for your specific situation.
With some careful planning, you can avoid any nasty fee surprises and make an informed decision on your mortgage and property purchase.
