Upfront fees for mortgages can be substantial, with some reaching almost £4,000. Moneyfacts data from 12 August indicates that 10% of residential mortgages have more than one upfront fee, though £999 was the most common fee found in an analysis of the best rates for popular mortgage scenarios.
Remortgagers typically encounter higher upfront fees than first-time buyers or home movers. An analysis found remortgagers paid an average of £1,117, while the average for both first-time buyers and home movers was below £900. Some top remortgage deals included fees of £1,999 and £1,499.
Despite some high individual charges, average fees on the best mortgage deals have fallen since 2024 for all borrower types. However, looking back to 2021, average fees for the best remortgage deals have slightly increased, while for first-time buyers and home movers, they have decreased by almost £200.
It is possible to add upfront mortgage fees to the loan, which can free up cash for other costs associated with buying a home. However, this means paying interest on the fee for the duration it remains outstanding. For example, adding a £1,000 fee to a £250,000 loan at 4.5% over 25 years would increase monthly repayments by almost £6.
Borrowers should also be aware of early repayment charges (ERCs), which can be costly if they overpay more than typically 10% of their mortgage balance annually. ERCs can be as high as 5% of the repaid amount in the first year of a deal.