Administration Fees to expect with a mortgage

These are applied to cover costs incurred by the lender in setting up the mortgage.

A Booking Fee This is often payable when you ask the lender to provide you with a Fixed or Capped Loan. Monies need to be allocated for each application received and the fee covers the cost of reserving the funds. Booking fees are normally paid when a request for the loan is submitted and are mostly non-refundable should the application not proceed.

An Arrangement Fee Is a one-off payment to cover the lender's costs in preparing the documentation and communicating with your Employer, Solicitor, Accountant or Mortgage Broker. It should be noted that this fee is not charged on all products. The fee is payable prior to the release of the loan monies and in most cases can be added to the mortgage on completion. It follows that if your application does not proceed for any reason the arrangement fee is not payable as long as you have asked for it to be added to the mortgage on completion.

Higher Lending Charge This covers the lender for any deficit if the property is repossessed and subsequently sold for an amount less than the outstanding borrowing. It is a 'one off' payment and can usually be added on to the loan. Some lenders do not charge the premium in any circumstances, whilst others impose the cost on loans in excess of 70% of the valuation. In the event of a claim the insurance company reserves the right to recover the amount of the claim from the borrower.

Early Repayment Charge This can be incurred if your mortgage is repaid in part or full or changed before the end of the agreed period. The fees are to cover the lender’s costs of releasing the security over the property and to cover the consequential interest rate risk, which can occur in such circumstances. These usually apply to fixed, capped or discounted loans.

It should be noted that different mortgage products carry different redemption fees. These fees are basically posted to cover administration costs.