Mortgage Fees - Key Costs [mortgage-interestrates.blogspot.com]

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Mortgage Fees - Key Costs [mortgage-interestrates.blogspot.com]

Mortgage lenders would have to charge a flat fee for processing a loan, ending the practice of calculating fees as a percentage of the loan size, under a proposal the CFPB is working on this year. Officials are also working on a broad set of standards ... Consumer Bureau Proposes Mortgage Disclosure Form

When you take out a mortgage on a property, be it for the first or the twenty first time, there are a range of fees to be considered in addition to the actual mortgage itself. These can vary from lender to lender, the price of the property and the amount you are borrowing.
 
Key fees - Mortgage brokers will generally charge an arrangement fee for setting up your new mortgage. They may also offer to add the cost on to the mortgage itself - be aware that this pushes up the amount owed, and the interest costs will also be added to it. Your broker may also offer incentives to get you to sign up - think carefully - does it add up to the best deal for you?
 
If you tend to swap and change your mortgage according to where you can get the best rate, adding any costs to the mortgage itself, however tempting, will cost you possibly hundreds of pounds every time you switch lender.
 
Valuation fees - Depending on the property you are buying, your mortgage lender will insist on a valuation being done.

This proves to the lender that your prospective purchase is actually worth at least what you are asking them to lend against it.
 
Many properties are suitable for a basic homebuyers report which will answer all the questions your lender needs to ask. Other properties, for example, very old houses, may need a more detailed inspection. This is called a full building report and will cost considerably more and will give much more detail to your lender.
 
The Royal Institution of Chartered Surveyors (RICS) will give you more information on the types of surveys available and what would be best for your needs.
 
Higher lending fees - If you are looking to borrow more than 90 per cent of the value of the property, then your lender may charge an HLC (higher lending charge) fee. Typically, this would be a fee of around 8 per cent on the difference between 75 per cent of the value up to the amount you want to borrow. Not all lenders charge an HLC fee, so always check with your broker.
 
As a guide, take a property worth 150,000 pounds on a 95 per cent mortgage. 75 per cent of the value is 112,000 pounds, and the amount to be borrowed would be 142,500 pounds. 8 per cent of the difference - the HLC - equals 2,400 pounds
 
Remortgage fees - Your mortgage may have been on a fixed rate for 2 or 3 years. Until recently, with the economic downturn, once a fixed rate deal finished, most people would have possibly paid considerably more when reverting to their lenders standard variable rate (SVR) As the Bank Of England base rate has actually fallen to 2 per cent, many SVR rates are now becoming more competitive. Taking into account the fees involved in remortgaging, it may now work out cheaper to stay with your existing lender than to change. It may also be worth checking with your existing lender to see if they can offer any incentive to stay with them - could you get a new fixed rate deal at an even lower rate than before?
 
Early repayment fees - Many mortgages have a clause whereby if you want to change in a fixed period, for example 1 or 2 years, you may incur early repayment charges (ERCs). This could be up to 6 months interest, a flat fee, or even a percentage of the outstanding balance. Avoid any mortgage deal with an excessively long ERC period.
 
Exit fees - Many, but not all, mortgage lenders will charge you if you wish to change lenders or even to pay off your existing mortgage. In a survey, these figures ranged from as little as 90 pounds to as much as 275 pounds on a fixed 5 year deal. Check with your lender what their fees are. Look at our mortgage exit fee guide for more details.
 
Other fees - There are other fees involved in either starting or ending a mortgage deal.
 
Stamp Duty - If your prospective property is valued at less than 175,000 pounds, then your purchase is exempt from Stamp Duty tax. This also applies to properties in "disadvantaged" areas. This was introduced by the Government to "kick start" the market for first time buyers.
 
Stamp duty on properties over 175,000 are subject to a sliding scale of fees:
 
  175001 to 250,000 pounds - 1 per cent of the value
 
  250001 to 500,000 pounds - 3 per cent of the value

  500,000 plus - 4 per cent of the value

Legal Fees - In order to ensure all the legal work is done quickly and correctly with regard to your property purchase, most of us use a the services of a solicitor. These services are also referred to as disbursements.
 
They will do all the relevant work, such as local searches, and paying any stamp duty to HMRC. Your solicitor will liaise with you, as well as any other relevant parties involved in a house sale and purchase "chain."
 
Get quotes from several solicitors as these can vary considerably, and make sure the quotes include all the relevant works they will carry out on your behalf. Find More Mortgage Fees - Key Costs Topics

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