Mortgage company want their legal fees paying?

AngelaJane68

Hello, I need some help please.  I'm helping my daughter organise her and her partner's mortgage.  She owns her current house outright (early inheritance from my mother, bless her) and they now want to move to a bigger house as they have a child.  Daughter can't be too picky regarding lenders as partner has ccj from ignored parking ticket (paid off and won't be doing that again!).  The company (named blanked out) that has given them an agreement in principle looks to be saying they want their legal fees paying?  Am I missing something?  Any advice? TIA

theartfullodger

IMHO the issue with fees is - are the OVERALL costs with THAT lender, adding together interest & fees, worse than other  lenders.

Who cares if fees are high if the interest rate is low..  

I look at mortgage options in terms of what the overall costs to me will be over 5 years. Mind you, when I explain this to brokers they usually look very confused... 

canaldumidi

Perfectly normal. There are legal costs associated with setting up a mortage and all lenders expect the borrower to pay these.

The actual fee may vary of course.

Sometimes a lender will have a special offer on a mortgage product eg:'appliaction fee/legal fee' paid by the lender, but that's like Currys having a sale to get you through the door.

saajan_12

AngelaJane68 said:

Hello, I need some help please.  I'm helping my daughter organise her and her partner's mortgage.  She owns her current house outright (early inheritance from my mother, bless her) and they now want to move to a bigger house as they have a child.  Daughter can't be too picky regarding lenders as partner has ccj from ignored parking ticket (paid off and won't be doing that again!).  The company (named blanked out) that has given them an agreement in principle looks to be saying they want their legal fees paying?  Am I missing something?  Any advice? TIA

Usually you appoint a solicitor on the lender's panel, so the same solicitor acts for both you and lender. The solicitor may have a small extra cost for acting for both, which you would pay. 

Also mortgage lenders often have an application fee - which is a mixture of them looking into your financials, house surveys, something to keep their interest rate low etc.Often these are conditional on the mortgage going through, so as theartfullodger says, I'd just look at that plus the interest as the total cost of borrowing the money. 

eg if you have a 3yr £100k mortgage, with 2% interest and a £1500 fee upfront, then dividing the fee into the monthly payments, that's effectively paying 1500 / 3 = £500/yr which is 0.5% of the £100k mortgage. So its effectively the same as a 2.5% interest mortgage with 0 fee. Note you can make this more precise by taking the capital repayments into account, and the fact that the fee is paid upfront not over 3 years.  

So main questions are
* are the legal fees you mention payable to the solicitor or lender?
* and are they conditional on the mortgage going through, or are they incurred regardless of the outcome? 

kingstreet

Lender legal expenses on an illustration form part of the APRC calculation and are not a separate charge. Your chosen conveyancer's fee quote will include such charges in the overall costs.

The APRC is useless for comparison as it assumes the SVR will remain the same for the whole mortgage term.

Slithery

Who did you think was going to pay for them?

[Deleted User]

Make sure the solicitor knows which lender is doing the mortgage and ask them to confirm the cost for working on their behalf. Most will charge a lot less than shown there but the lender has to put something down as it is used to work out other things on the illustration.  Not all lenders include it on the illustration which i prefer as it just adds to confusion.  

If the solicitor says their fee for acting for the lender is £180 plus vat then thats the fee and you can ignore the one shown on the illustration.   If its an obscure lender then ensure the solicitor is allowed to act for them or you may have to pay a seperate solicitor to do the lenders work

AngelaJane68

Thank you very much to those who provided helpful replies.  I wasn't sure if it was yet another extra expense not factored in.  Thank you!