The cost of fee free mortgages

Hominu

Here's the booklet I've been given:

'Fee free' means no booking fee, no administration fee, no valuation fee, no exit fee, no closure fee, no early payment fee. It does not include any legal fees incurred.

You can make as many or a little payments as possible as long as you pay as least the interest each month. You can make unlimited overpayments or pay off the mortgage in its entirety at any time within the agreed term. We may ask you to prove that you can pay off the mortgage before the end of the mortgage term.

So I'm assuming by this that only the legal fees are payable. My solicitor includes in his quote "Communicate and act for the mortgage lender on your behalf". So will this cover the "legal fees" above, or will the mortgage lender just send me a bill from their solicitor at a random point in the future for handling there side of it? If so, what is the typical cost of this?

Thrugelmir

The lenders charges will quoted in the estimate to you. There'll be no additional charges levied.

Hominu

Which? The solicitors or the banks? The bank just says "No fees apart from legal fees incurred", but doesn't actually quote any legal fees.

I'm guessing that they are going to spring about £300 in charges on me as soon as I take out the mortgage, but whenever I ask them, they just keep saying its fee free. Since they are a typical big bank, I don't believe them.

grey_gym_sock

then why not apply for a mortgage with somebody you consider more trustworthy?

Hominu

grey_gym_sock wrote: »

then why not apply for a mortgage with somebody you consider more trustworthy?

Because I don't see anyone else who offers a fee-free offset mortgage. They only offer fee-free standard mortgages with early repayment charges.

kingstreet

The lender's legal fee quoted on a key facts illustration is there only because it forms part of the APR calculation. The actual cost is part of the illustration provided by your solicitor.

Most firms quote a headline fee which include acting for the lender, but where they don't, this is shown as an item in the illustration, such as "acting for mortgage lender."

Where a lender (HSBC for example) uses a solicitor of its choice to act for it, you will be quoted the cost at the time of application. For the record, it's £160 + VAT, £192 for HSBC.

You do need to be aware that disbursements, such as search telegraphic and land registry fees are payable. These will not be part of a mortgage offer.

Hominu

kingstreet wrote: »

Where a lender (HSBC for example) uses a solicitor of its choice to act for it, you will be quoted the cost at the time of application. For the record, it's £160 + VAT, £192 for HSBC.

Thanks, thats exactly what I wanted to know. I asked HSBC and all they said was that if I used their approved solicitor, there would be no fee, but wouldn't say anything about if I used my own solicitor. There solicitor was about £300 more than a local one, and it seems that even if I choose my own, it'll still be within £100 difference due to having to pay both of them (and probably take longer due to 2 solicitors being involved).

kingstreet wrote: »

You do need to be aware that disbursements, such as search telegraphic and land registry fees are payable. These will not be part of a mortgage offer.

But these are part of my own solicitors quote and nothing to do with the mortgage costs? (I have to pay them regardless of whether I take out a mortgage or not) Or do you mean the banks solicitor will charge for such things as well unless I use the same solicitor?

kingstreet

No. There will only one lot of disbursements to pay for. Your solicitor will quote them.

You'd be surprised by the number of people who post on here who think "free legals" means the lender will pay for absolutely everything.

On HSBC, they will use your solicitor if he's CQS accredited and the mortgage amount is under a certain amount (can't remember, sorry). If not CQS or above the level, they will have Countrywide, or someone from their panel, act for them and do the double checking before completion. That's when the £192 fee comes in.

There's a lengthy thread on HBR&S about this, if you search for it.

Hominu

Ah, right, my solicitor is CQS registered apparently, and I found them on the CQS website, so I assume so.

So hopefully that means the "Fee free" means exactly that - I only have to pay my solicitor. Next year, I'll be able to offset 100% of the mortgage amount, so hopefully that means I pay nothing from then on (this is why I'm going for a higher interest but fee free, as I suspect I'll be paying less in interest than the £1499 booking fee to get 0.5% shaved off my interest)

Or am I missing things that'll sting me later on?

kingstreet

Unlikely, I'd have thought.