There are 3 types:
While we’re talking about surveys, your mortgage lender’s going to want to check your potential new home out as well – and they’ll expect you to foot the bill for it. Basically, what’s happening here is the lender needs to know that the property you’re buying is a safe bet for their money to ride on. When you take out a mortgage, you’re essentially putting up the property itself as security for the loan you’re getting. Naturally, enough, the lender’s going to want to give the place a once-over before committing. The costs for this will vary from lender to lender, so make sure to ask questions up-front to avoid any nasty surprises later.
This one’s supposed to cover the cost of actually setting up your mortgage deal. As with valuation fees, every lender’s going to have their own fee structure for this, so make sure you know what you’re getting yourself into ahead of time. For example, one lender might charge a single flat fee, while another will base the charges on the value of the property – which might be a problem with larger mortgages.
You’ll have a couple of different approaches to choose form here. If your finances are up to it, you might decide to cough up the arrangement fees at the start. As with your house deposit, this can be painful at first but end up saving you money down the line. If you decide to lump the fee into the total mortgage amount instead, you’ll spread the payment out over the lifespan of your repayments, but get hit with extra interest charges along the way. Depending on your situation, picking a mortgage with a higher interest rate might actually work out better if it brings the arrangement fee down enough
With all these factors to weigh up, picking the right mortgage and lender can be tough. That’s why so many buyers find themselves coughing up £400-£500 to a mortgage broker for advice. Not every broker works or charges the same way, though. Some, for instance, might not actually charge a fee at all, getting a commission from the lender instead. Others will do both.