Mortgage costs: deposit, broker, lender and product fees

The deposit is not a cost

It is worth separating the deposit from everything else in this article, because it behaves completely differently.

When you pay stamp duty, the money is gone. When you pay a survey fee, the money is gone. When you put down a deposit, the money becomes equity in a property you own. It is still yours. It has moved from one form into another, and it may go up or down in value with the property, but it has not been spent in the way a fee has been spent.

This matters because it changes how you should think about the trade-off. Putting down a larger deposit is not the same as spending more; it usually reduces both your interest rate and your monthly payment. Whether it is the right use of your cash depends on what else that money would do and how much liquidity you want to keep — but it is not a cost to be minimised in the way fees are.

Why the deposit still changes what you pay

Lenders price by loan-to-value, the proportion of the property’s value you are borrowing. Rates are typically banded, with better pricing available at each lower LTV band. Crossing from one band into a lower one can produce a noticeably better rate.

The practical implication: if you are close to a band boundary, a relatively small increase in deposit can pay for itself many times over across a mortgage term. It is worth checking where the boundaries fall for the lenders you are considering before fixing your deposit.

You can see how a change in deposit affects both LTV and the monthly payment using the ABA mortgage calculator, and section 2 of the UK Mortgage Guide covers deposits and LTV in more detail.

Lender and product fees

The names vary between lenders, which does not help. These are the charges you are most likely to meet:

• —Arrangement or product fee. The main fee attached to a specific mortgage product. Products with lower rates often carry higher fees, and vice versa. Sometimes payable up front, more often addable to the loan.
• —Booking or application fee. Charged by some lenders to reserve a product. Where it exists it is often non-refundable, including if the application does not proceed.
• —Valuation fee. For the lender’s own valuation. Many lenders absorb this on residential products; others charge it, and the amount usually scales with property value.
• —Funds transfer fee. Sometimes called a telegraphic transfer or CHAPS fee, charged for sending the mortgage advance to your solicitor on completion.
• —Mortgage exit or closing administration fee. Charged when the mortgage is finally repaid. It is not an early repayment charge — it applies even at the natural end of the term.

Not every lender charges every one of these, and the combination is part of what makes two apparently similar products different. When you receive an illustration, read the fee section rather than the headline.

Adding the fee to the loan

Most lenders will let you add the product fee to the mortgage rather than paying it on completion. This is genuinely useful when cash is tight — but it is borrowing, and it should be understood as borrowing.

A fee added to the loan is repaid over the full mortgage term, with interest, unless you make an overpayment to clear it. On a twenty-five or thirty-year term, the total paid on that fee can be substantially more than the fee itself. The longer the term and the higher the rate, the worse the arithmetic.

There is a middle path many buyers do not know about: add the fee to keep completion affordable, then make an overpayment early in the mortgage to clear it, if your product allows overpayments without charge. Most fixed-rate products permit some level of annual overpayment. Section 11 of the UK Mortgage Guide covers overpayments.

Broker and adviser fees

Mortgage advice can be paid for in different ways. Some advisers charge the client a fee, some are paid a procuration fee by the lender, and some use a combination of the two. All of it must be disclosed to you in writing before you commit, and you should be told clearly what you will pay and when.

If a fee is charged, ask when it becomes payable — on application, on offer, or on completion — and whether it is refundable if the case does not proceed. These terms vary and the difference matters if a purchase falls through.

What you are paying for is access and judgement: which lenders will consider your circumstances, which will not, and how a case should be presented. For a straightforward employed applicant with a clean credit file, the value is mostly convenience. For someone with overseas income, a limited company, a short UK credit history or a non-standard property, it can be the difference between an offer and a decline.

Early repayment charges

An early repayment charge applies if you repay all or part of the mortgage during a tie-in period — typically the length of a fixed rate. It is usually a percentage of the amount repaid, and the percentage often steps down each year.

This is the cost most likely to catch people out, because it only bites when something changes: selling sooner than planned, moving abroad, coming into money, or wanting to remortgage because rates have moved. On a large loan an early repayment charge can run well into five figures.

Two questions to ask before committing to any fixed rate. First, what is the charge in each year of the fixed period? Second, is the product portable — can you take it with you if you move — and under what conditions? Portability is common but not guaranteed, and it usually depends on you qualifying for the new borrowing at the time.

Reading the illustration

Before you apply you will receive a written illustration setting out the product’s terms. It is a standardised document and it repays a careful read.

Look for: the initial rate and how long it lasts; what the rate reverts to at the end of the initial period; every fee, and whether each is payable up front or added to the loan; the early repayment charge for each year; the overpayment allowance; and the total amount payable over the term. That last figure is where a large fee or a long revert period becomes visible.

Comparing a low rate against a high fee

This is the most common practical question, and the arithmetic is simpler than it looks.

The rate saving is proportional to the loan size; the fee is fixed. So the larger the loan, the more a low rate with a high fee makes sense — and the smaller the loan, the more likely a fee-free product at a slightly higher rate wins. The comparison should also be made over the length of the initial period, not the whole term, because you will probably remortgage when the fixed rate ends.

A rough method: work out the total interest over the fixed period at each rate, add the fee to the lower-rate option, and compare. Where the two land close together, the fee-free option is often preferable anyway, because it leaves you free to move if circumstances change without having paid for a benefit you did not use.

If you are borrowing from overseas

Applicants with overseas income or limited UK credit history face a narrower market. Fewer lenders will consider the case, and those that do may apply different criteria on deposit, income multiples and acceptable currencies.

The costs that follow from this are indirect but real: a smaller pool of products means less scope to shop around on fees, and cases often take longer, which has its own cost in a chain. Preparing documentation properly before applying — income evidence, source of funds, translations where needed — is the single most effective thing you can do to keep the process moving.

Read next

Pillar guide

The complete cost of buying in the UK

Tax

Stamp duty for UK and overseas buyers

Legal & survey

Solicitor, searches, survey and valuation

Ownership

Ongoing costs after buying

Written by

Berkan Akşit

Founder of ABA Financial Consultancy Ltd, a London-based consultancy working with Turkish and international clients on UK property and mortgage journeys. Berkan supports clients with their mortgage options through Capricorn International, and writes the ABA UK Mortgage Guide in English and Turkish.

Last reviewed August 2026