Hidden Mortgage Fees First-Time Buyers Often Overlook [2025 UK Guide]

Why Mortgage Fees Catch Out First-Time Buyers

For many first-time buyers the focus is on saving a deposit. But here’s the truth: your deposit is only the beginning . When you take out a mortgage there are a range of additional fees—some obvious others less so—that can add thousands of pounds to the cost of buying a home.

Mortgage lenders solicitors and surveyors all have their own charges and failing to factor them in can stretch your budget thin just as you’re preparing to move.

This guide reveals the hidden mortgage fees first-time buyers in the UK often overlook in 2025 what they cover and how you can reduce or avoid them.

The Main Mortgage Fees You Need to Know

1. Arrangement Fee (Product Fee)

• What it is: Charged by the lender for setting up your mortgage deal.

• Typical cost: £500–£2 000.

• Hidden catch: Sometimes added to your loan meaning you pay interest on it for the life of the mortgage.

Tip: Always compare deals by looking at the total cost over the fixed term not just the interest rate.

2. Booking Fee (Application Fee)

• What it is: A non-refundable fee to secure a specific mortgage product.

• Typical cost: £99–£250.

• Hidden catch: You don’t get it back if your application fails.

3. Valuation Fee

• What it is: Lender’s valuation to confirm the property is worth the loan amount.

• Typical cost: £250–£600 (sometimes free in 2025 deals).

• Hidden catch: This is not the same as a survey—it won’t flag repairs or issues.

4. Mortgage Account Fee (Administration Fee)

• What it is: Covers the setting up maintaining and closing of your mortgage account.

• Typical cost: £100–£300.

• Hidden catch: Charged at the beginning end or both—check the fine print.

5. Telegraphic Transfer Fee (CHAPS Fee)

• What it is: The cost of transferring funds from your lender to your solicitor on completion day.

• Typical cost: £25–£50.

• Hidden catch: Small but unavoidable for most purchases.

6. Higher Lending Charge (HLC)

• What it is: Extra fee if you have a small deposit (usually under 10%).

• Typical cost: Up to 1.5% of the loan.

• Hidden catch: Some lenders don’t use this fee anymore but others build it into higher rates instead.

7. Early Repayment Charges (ERCs)

• What it is: A penalty if you repay or switch your mortgage before the fixed term ends.

• Typical cost: 1%–5% of the outstanding loan.

• Hidden catch: Applies if you want to remortgage early to chase lower rates.

8. Exit Fees (Redemption Fees)

• What it is: Charged when you fully repay your mortgage or switch lenders.

• Typical cost: £75–£300.

• Hidden catch: Even if you’ve cleared the balance the admin fee may still apply.

9. Broker Fees

• What it is: Paid to a mortgage broker for finding you a deal.

• Typical cost: Free up to £1 000 (some are commission-based others charge you directly).

• Hidden catch: “Free” brokers may be tied to a limited lender panel—reducing your options.

10. Insurance Requirements

• What it is: Lenders require you to have buildings insurance before completion.

• Typical cost: £150–£500 annually.

• Hidden catch: Some may push their own policies—always shop around.

Additional Costs Often Confused with Mortgage Fees

While not strictly mortgage fees first-time buyers often underestimate these:

• Survey Costs – £300–£1 000 for HomeBuyer or full Building Surveys.

• Solicitor/Conveyancer Fees – £1 000–£2 000 including searches.

• Stamp Duty – First-time buyers pay none up to £425 000 in England but it applies above that.

• Moving Costs – £500–£1 500 depending on distance and belongings.

How to Minimise or Avoid Hidden Mortgage Fees

Choose fee-free mortgages carefully – Sometimes higher rates offset the savings.
Ask if fees can be added to the loan – Only do this if cash flow is tight but remember you’ll pay interest.
Use an independent mortgage broker – They can compare across the whole market.
Factor everything into your budget early – Don’t get caught out at exchange or completion.

Example: How Hidden Fees Add Up

Buyer Scenario:

• Property price: £250 000

• Deposit: 10% (£25 000)

• Mortgage amount: £225 000

Hidden Fees Breakdown:

• Arrangement fee: £999

• Valuation fee: £400

• Booking fee: £150

• Account fee: £200

• CHAPS fee: £35

• Solicitor fees: £1 500

• Survey: £600

Total extra upfront cost: ~£3 884

That’s nearly £4 000 on top of the deposit —a surprise many first-time buyers aren’t prepared for.

Final Thoughts

For first-time buyers hidden mortgage fees can feel like “death by a thousand cuts.” While none are shocking individually together they can significantly affect your buying budget.

The key is transparency and preparation —understand the full breakdown of charges from your lender broker and solicitor before you commit.

With the right planning you’ll avoid nasty surprises and keep your first home purchase on track.