costs incurred in the uk mortgage process

Posted by David
March 24, 2006
Costs that may be incurred in the Mortgage process

By Nigel Uglow

Please note this comprehensive list applies only to costs directly related to the Mortgage. They do not include Solicitors fees, Estate Agents fees and Stamp duty which will be covered in future articles.

Valuation Fee
Payable at application stage. This will cover the cost of the valuation on the security property and is carried out for the purposes of the Lender. The amount would vary depending on the estimated value of the property and the company carrying out the valuation. The valuation fee is non refundable once the valuation has been conducted but would normally be refundable in the event of prior cancellation

Application Fee
Payable at application stage this can sometimes be another name for the valuation fee but in most cases would be an additional charge for processing the mortgage application. In some instances the application fee can be an amount to cover both the valuation fee and processing charge. The cost represented by the valuation fee is non refundable once the valuation has been conducted but would normally be refundable in the event of prior cancellation. The cost represented by the processing charge would normally be non refundable in any event.

Reservation Fee
Payable at application stage and normally non refundable. This fee is to reserve funds on a Mortgage product whose terms may be considered advantageous and normally where funds are limited and may only be available for a short period. The advantages of the Mortgage product can be any number of factors relating to the mortgage terms and conditions but would normally include a competitive interest rate.

Survey Fee
Payable at application stage this is normally carried out for the purposes of the borrower and at the expense of the borrower. This would be in addition to the valuation and is a more detailed inspection of the property. The extent of the inspection is determined by the type of survey requested and can vary from the full structural inspection to partial inspection restricted to specific areas of concern.

Arrangement / Completion Fee
This administration fee charged by the Lender is paid by the borrower on completion and will normally be added to the Mortgage advance. The Lenders terms dictate if this can be included in the Mortgage advance. This fee amount varies between both Lenders and Mortgage products.
Brokerage / Intermediary Fee
This arrangement fee is payable where the borrower is using a third party to assist in arranging the Mortgage. This would normally be payable subject to satisfactory completion of the Mortgage. This can be paid in advance but would normally be payable on completion.

Higher Lending Charge
Payable at completion this is an indemnity fee charged by the Lender for the purposes of the Lender and paid by the borrower. This can be payable where the mortgage advance exceeds the normal loan to value parameters of the Lender. It is calculated as a percentage of that part of the mortgage advance over and above those parameters. The Lenders terms dictate if this can be included in the Mortgage advance.

Early Repayment Charge
Payable on partial or full redemption of the Mortgage. The Early Repayment Charge may or may not be payable depending on the Lender and Mortgage product. When payable the method of calculation can be expressed in several ways.

Redemption Administration Fee
Payable on redemption of the Mortgage. This fee to cover administration costs when the Mortgage is repaid varies between Lenders.

Deeds Production Fee
Payable on redemption of the Mortgage. This fee to cover the administration cost of recovering the Deeds for the borrower varies between Lenders.

Own Buildings Insurance Fee
Payable on completion. This fee applies where the borrower arranges their own Buildings Insurance and covers the extra administration costs that result.


You may freely reprint this article provided the following author's biography (including the live URL link) remains intact: About The Author

Nigel Uglow is the founder of Flagstone Finance Ltd who help applicants find the best available Mortgages via the http://www.flagstonefinance.co.uk/ website
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