Adding product fee to mortgage - confusion about overpayment and upfront payments

StandingInTheSun

We chose to add our product fee (995) to the mortgage because:

1) We were advised by our broker we would not get it back if the purchase fell through
2) According to the advice on the MSE website, you should add the product fee to your mortgage and simply overpay it on day one, which we would intend to do, and this means you don’t pay any interest on it, but also protects you if it falls through before that

Adding it to our mortgage has increased our monthly payment by approximately £4 so negligible difference there.

However, we received our formal offer and it states that the product fee, if paid upfront, IS fully refundable until completion, which is not what our broker told us.

So simple question - is this worth making a fuss over this and asking them to recalculate and we’ll pay it upfront, or should we just stick with our plan to overpay £995 on day one and it will work out the same anyway?

[Deleted User]

I tell people to add it on and then clear it later as over the last 12 months its harder to say with complete certainty that the offer will be approved.   Most fees are refundable but its the hassle of getting the money back and then paying another one for a new application while waiting for the first one to come back. 

Also a few years back I had santander refuse to refund one even when clients pulled out 2 days after application.  Cant be bothered with the amount of work that created for me

getmore4less

Not sure why everyone does not go with adding the fees when that is an option

It does not cost any more if you do it properly.



Pay the fees up front is just another overpayment like any other there is nothing magic that saves money


To do it properly you borrow less by the same amount  as the fee giving a have a slightly bigger deposit.


no need to be faffing around with overpayments.



it makes no difference that payment is a bithigher it just becomes a tiny overpayment once you do a bigger one to cover the fee.