1. Application fees



Many of the best mortgage deals come with an additional fee. This can be anything from ?200 up to ?600. You will need to pay the fee upfront when applying.

2. Valuation fees and surveys

Mortgage lenders will arrange for a surveyor to come and inspect the property you wish to buy to ensure that it is worth the asking price. They will also check that there are no obvious reasons why the lender should not give you a mortgage based on what the surveyor sees.

The cost for this can range from a few hundred to several hundred pounds depending on the type of property you are looking to buy.

It is worth considering paying to have an additional survey done on the property to ensure that it is structurally sound. A basic survey will costsaround ?300 while a full structural survey will be around ?800.

3. Solicitors fees

Legal fees cost around ?1,500 for a purchase. If you are selling as well, you can double that figure.

4. Mortgage indemnity guarantee (MIG) / mortgage indemnity premium (MIP).

If you are putting down a deposit of 25% or less, then you will need a MIG. This is an insurance policy that protects your lender in the event of your home being repossessed and being worth less than the outstanding mortgage amount.

Not all lenders charge you for this insurance, so do check. The typical cost for a MIG / MIP on an average sized mortgage could be several hundreds of pounds.

230. Extra Mortgage Costs - part 2

5. Exit fees

Because the mortgage marketplace is so competitive now and there are always better deals than your existing one available, most lenders will charge you an exit fee of a couple of hundred pounds. This is to try and stop you switching to another lender.

6. Redemption penalties

For the same reason as above, many lenders will offer you a great deal ? say a cashback or discounted rate for two years. However, part of your contract with them is the length of time you are tied in to them. This, for example, could be for another year after your discounted rate ends.

You will then have to pay a redemption penalty to get out of the contract. This could be anything from paying a percentage back of your cashback or even paying thousands of pounds.

Check the terms and conditions very carefully to see what your chosen lender's redemption penalties are like.

7. Home and contents insurance

You need to protect your home and contents! Don't buy insurance from your mortgage lender (who will undoubtedly charge you more than they need to). Shop around online for a better deal.

8. Life assurance

Life assurance ensures that should you die during the term of your mortgage, your outstanding mortgage amount will be paid off. This means that your partner and dependants will not have the financial worry about paying the mortgage.

9. Mortgage payment protection insurance (MPPI)

MPPI policies will help pay your mortgage should be unable to work due to accident, sickness or involuntary redundancy. As with all mortgage related insurance, lenders? policies are more expensive than those from specialist providers.

10. Stamp duty

Stamp duty is a tax that you have to pay when you buy a property. The charging structure goes in bands, with 1% charged for properties valued at ?125,001 to ?250,000.

For properties valued from ?250,001 to ?500,000 it is 3%. And it is 4% for ?500,001 and above.

It is expensive and unavoidable sadly!