Deposit & mortgage

Mortgage fees explained

The interest rate is only part of a mortgage's cost. Fees can add hundreds or thousands of pounds, here's every charge to expect and how to compare them.

Last reviewed 1 June 2026

In short

Mortgage fees are the charges a lender (and sometimes a broker) applies on top of the interest you pay. The biggest is usually the arrangement (or product) fee, often £0–£2,000, charged for setting up the deal. Others include a booking fee to reserve the rate, a valuation fee for the lender's survey, a broker fee if you use an adviser, a CHAPS/telegraphic transfer fee to send the funds, and an exit or mortgage account fee at the end. A low headline rate with a high arrangement fee can cost more overall than a slightly higher rate with no fee, so you should compare the total cost over the deal period, not just the rate. You can often add the arrangement fee to the loan, but you'll then pay interest on it for the whole term.

Common mortgage fees

Fee	Typical cost	What it's for
Arrangement / product fee	£0–£2,000	Setting up the mortgage deal
Booking / application fee	£0–£250	Reserving the rate when you apply
Valuation fee	£0–£400+	Lender's check on the property's value
Broker fee	£0–£500+	Advice and arranging the mortgage
CHAPS / transfer fee	£25–£50	Sending the loan funds to your solicitor
Exit / account fee	£0–£300	Closing the mortgage at the end
Early repayment charge	1–5% of balance	Repaying during a deal period

Figures are typical ranges, always check your own mortgage illustration.

Rate vs fee: the real cost

Lenders often advertise their lowest rates alongside high arrangement fees. A headline rate looks cheap, but the fee can wipe out the saving, especially on a smaller mortgage where the fee is large relative to the loan.

The fair way to compare deals is the total cost over the deal period: add the fees to the interest you'd pay across (say) the two- or five-year fixed term. A fee-free deal at a slightly higher rate frequently beats a low-rate deal with a £1,500 fee, particularly on smaller balances.

Fees you might also meet

Higher lending charge, on some high loan-to-value mortgages.
Re-inspection fee, for staged payments on a new build or self-build.
Porting fee, if you move your deal to a new property.
Funds transfer / completion fee, to release the money on completion.
Missed payment and admin charges, if something goes wrong.

How to compare deals fairly

List every fee
Use the lender's key facts illustration to capture all charges, not just the rate.
Calculate total cost over the term
Add the fees to the interest payable over the deal period to get a true figure.
Decide whether to add fees to the loan
Paying upfront avoids interest; adding them spreads the cost but costs more long term.
Factor in incentives
Some deals offer cashback or free valuation/legal work that offset higher fees.
Compare like with like
Match deal lengths and loan sizes so the comparison is meaningful.

Adding the fee to the loan isn't free

You can usually roll the arrangement fee into the mortgage, but you'll pay interest on it for the whole term, turning a £1,000 fee into considerably more. Pay upfront if you can afford to.

Watch for cashback and free extras

Some mortgages offer cashback, a free valuation or free basic legal work for remortgages. These incentives can outweigh a higher fee, so include them when you total up the real cost of each deal.

Common questions

What are mortgage fees?

They're the charges a lender (and sometimes a broker) applies on top of interest, including arrangement, booking, valuation, broker, transfer and exit fees. Together they can add hundreds or thousands of pounds to a deal.

What is a mortgage arrangement fee?

It's the main fee for setting up a mortgage deal, often called a product fee, typically ranging from £0 to around £2,000. You can usually pay it upfront or add it to the loan, though adding it means paying interest on it.

Should I pay the arrangement fee upfront or add it to the mortgage?

Paying upfront avoids interest. Adding it to the loan spreads the cost but means you pay interest on the fee for the whole term, making it more expensive overall. Pay upfront if you can afford to.

Is a low rate with a high fee worth it?

Not always. On smaller mortgages a large arrangement fee can outweigh the saving from a lower rate. Compare the total cost over the deal period rather than just the headline rate.

Do I have to pay a broker fee?

Not always, some brokers are fee-free and earn commission from the lender, while others charge a fee for advice. Always ask how your broker is paid and what you'll be charged before proceeding.

What is a CHAPS or telegraphic transfer fee?

It's a small charge (usually £25–£50) for the lender to send the mortgage funds securely to your solicitor on completion. It's standard on most mortgages.

Are there fees at the end of a mortgage?

Often yes, an exit or mortgage account fee (typically up to £300) when you repay or move the mortgage. There may also be an early repayment charge if you leave during a deal period.

Can I avoid mortgage fees?

You can choose fee-free deals, which trade a higher rate for no arrangement fee, and use a fee-free broker. Some lenders waive valuation or legal fees through incentives. You can't usually avoid the small transfer fee.

Sources

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