Mortgage fee: add it to loan or pay upfront?

steveyme

I was just about to sign up for my first ever mortgage when I noticed an £800 arrangement to be added to the total borrow. Now is my opportunity to amend this if necessary. I probably did 'ok' it verbally, but in retrospect I feel this bit was rather rushed past me as the normal thing to do. Wouldn't I be a lot better off paying it now? As it turns out, I quite easily could afford to. When I contacted my brokers, they said they could make it payable on completion of sale instead. Any thoughts very much appreciated! My rate is 2% fixed for two years.

amnblog

The mortgage market review stipulates that your advisers should outline the advantages and disadvantages of adding the fee to your loan.


In short adding the fee obviously means you will pay interest on it at the prevailing mortgage rate so it costs you more in the long term.


About £32 in the first two years from what you have said.


It's no different from borrowing another £800.

steveyme

Thanks! I'll pay it off now then, I don't want to borrow more than I have to :-)

kingstreet

Arrange for it to be deducted from the advance on completion, then you don't have to worry about trying to get it back if anything goes wrong.

All you'll do is increase your deposit payment to your solicitor by that £800.

owitemisermusa

Some lenders give you two weeks to pay it.

Jakg

I don't see the difference between the fee and the outstanding balance on the loan.

If you could easily afford to pay more upfront and don't want to pay any more interest than you have to, why not just put a higher deposit down?