A common mistake that people make when applying for a mortgage, or indeed a remortgage, is to take into account the interest rate and nothing else. Unfortunately every mortgage has costs associated with it and it’s these costs that can be the difference between the lender you go with and the one you reject. So what costs are involved?

1. Arrangement Fee
Every mortgage has an arrangement fee that covers the administration costs of setting up the mortgage. These vary greatly from lender to lender and also from mortgage to mortgage. At the present time arrangement fees range from £249 up to £999 but you’ll find that the mortgages that have the lower arrangement fees have other stipulations attached as well, such as a 40% deposit or a minimum loan amount. This cost is one of the biggest you’ll have to pay with regards to your mortgage and so it should be a consideration.

2. Legal Fees
Again this is another must-have when buying a property. Your solicitors sort out all of the technical stuff and although their fees aren’t directly linked to the mortgage or the lender they still have to be paid.

3. Valuation Fees
Your mortgage lender will insist that a valuation is done on the property in question so that they know they’re covered should anything go wrong. The valuation is normally carried out by an independent company however you still have to pay for it and if you aren’t happy with the valuation you’ll have to pay for a second one as well.

4. Bank Transfer Fees
It’s probable that you’ll have to move your mortgage funds from your account to that of the seller quickly on the day of completion and for this you’ll need to pay for a telegraphic transfer. Although this isn’t overly expensive it is still an additional cost that has to be paid.

5. Insurance Fee
Most lenders expect you to take out buildings insurance with them when you take your mortgage out but this isn’t a legal requirement. You can choose to use another insurance provider if you want however your lender may then charge an administration fee and this has to be paid by you as well.

6. Early Repayment Fees
If you choose to repay your mortgage in full or you remortgage before the terms of your current mortgage are up then you’ll probably be charged an early repayment fee to cover the costs of administration. This can work out to be another big cost and should be taken into consideration before signing for your mortgage.

7. Advisor’s Fees
If you choose to use the services of a mortgage advisor or broker then you’ll have to pay their fees as well. You can opt to add their fees to the amount you borrow from your lender or you can pay them separately if you prefer. Either way they are quite expensive so you should get quotes from several advisors before making a decision.

All of these fees need to be taken into consideration when choosing a mortgage as excessive fees can add thousands to the amount you borrow…and that’s the last thing you want after haggling with the seller to get a few thousand off the price of the house.