Mortgages are loans that are used to buy properties. Paid for in premiums through an extended period of time, a borrower has more to pay for than just the mortgage. Top of the list of expenses for securing mortgages is the mortgage valuation fee. This fee is for professionals who assess and evaluate a property that is to be mortgaged. Mortgage lenders must know the value of a property before issuing mortgages. The property is security for their loan. Repossession is a possibility if the borrower fails to repay his loan. A wrongly quoted price will mean that the lender will have to lose some money if the property needs selling.
Mortgage valuation fees are by no means the only costs associated with a mortgage application. There are many other charges. These fees pay for every service that the lender offers to the borrower. The fees start adding up from the time the borrower sends an application for a mortgage to the time that he fully repays the mortgage. The first fee that is charged even before valuation fee is the booking fee. A booking fee pays for services offered during processing of loan application forms of a borrower. The lender will have to get someone to go through the borrower’s application forms and shortlist the borrower for the mortgage.
The other fee is the arrangement fee. Once a lender is shortlisted and deemed fit for a mortgage, the lender must make arrangements on how the borrower will get the money. There are many documents he will fill. He will also ensure that there is enough money to send to the lender. All these services cost a borrower the arrangement fee. Related to the arrangement fee is the telegraphic fee. This is the cost of transferring an arranged mortgage to the borrower’s solicitor.
Mortgages are usually paid for in instalments over a very extended period of time. A 30-year mortgage can have as many as 360 monthly payments. A lender must account for each instalment that is paid as well as those that are not paid for. He will have to do this during the whole duration of mortgage repayment. The lender cannot maintain a borrower’s mortgage like this without asking for some service fee. The service charge, in this case, is the mortgage account fee. Mortgage account fees pay for the administration and management of a mortgage from the day it is issued until the time when payments are complete.
Other mortgage costs include missed payment fees, mortgage broker fees, higher lending charges, early repayment fees and closing or exit fees. Missed payment fees are charged on any unpaid instalments. Higher lending charges are levied when a borrower takes a mortgage that is more than the value of his property. It protects the lender from losses that could arise if he repossesses and sells the property. The exit fee is paid for the cost of terminating a mortgage at the end of a mortgage period.