What is The Real Cost of a Mortgage? Mortgage-Related Fees and Costs.
Buying a house is an expensive project involving, for many, to engage in a mortgage. Beware to the initial cost of the loan numerous costs and fees will be added. All mortgage related fees which you'll have to pay will be set out clearly in the key facts illustration (KFI) that the lender or mortgage broker gives you. However the key fact does not include all the cost and fees that you will have to pay. What is the real cost of a mortgage?
The KFI include the following adding fees: Mortgage broker fee (for arranging the mortgage or providing you with advice), Mortgage booking fee or mortgage arrangement fee (A commitment or administration fee usually payable to the lender to reserve the mortgage funds, Varies but typically £100-£500), Valuation fee To assess that the property is appropriate security for the mortgage, Higher lending charge (To get insurance cover in case you don't pay the mortgage, and they repossess your home and have to sell it at a loss), Fee to insure your property (If you do not insure your property through the lender), Re-inspection fee, Early repayment charge If you repay your mortgage early and Fees to repay the mortgage
Other fees that do not appear in the KFI are the following: estate agency fee marketing and selling your home (typically 1-3% of the selling price), stamp duty tax payable to the government when buying (varies depending on purchase price), legal fees for solicitor for searches, land registry etc (at least £400)
You can decide to add fees charged by the broker and lender to your mortgage. Even if you will pay less in the beginning, be aware that in the long run it will cost you more in the long run as you will pay interest on the fees. Many broker or lenders, however, have large financial incentives ranging from small fees to a large cash back. As usual you will be well advised to look around and compare offers before committing to a mortgage.
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