When to pay the product fee?

esubbs

This one has got me confused (easily done at the moment).

We have applied for a mortgage with Santander with a product fee of £999. When we last applied for a mortgage this product fee was due on completion so I (wrongly, it appears) assumed this was the same. However, less than a week into the process and still awaiting valuation and address verification letters, Santander have requested this fee. I have no issue with paying it but my concern is what happens if the house purchase falls through considering we are so early on in the process, draft contracts haven't even been prepared yet let alone searches requested or surveys conducted. Santander say the fee is non-refundable but surely if their offer is not what you applied for or the sale falls through for some other reason and you end up not taking that mortgage then there is no product to pay for? If we had opted to add the fee to the mortgage and then the sale fell through we wouldn't need to pay it so should we have done this?

K_S

@esubbs My advice to clients is almost always to add the fee to the loan and pay it off on day 1 of the mortgage if they so wish.

A lot of lenders will refund product fees if it does not go to offer or complete but by adding it to the loan you just avoid the risk of losing the fee or the faff of getting a refund.

esubbs

Thanks K_S,

Would it be a major hassle if I made a change to the application to add the fee to the loan now I wonder?

K_S

esubbs said:

Thanks K_S,

Would it be a major hassle if I made a change to the application to add the fee to the loan now I wonder?

@esubbs I never had to do it as it's always been added to the loan but Santander amendments are fairly straightforward for intermediary applications so should be similar direct.