Adding Mortgage Fees to Your Loan: Complete UK Guide 2026
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When arranging a mortgage in the UK, you'll face various fees and charges. One critical decision is whether to pay these fees upfront or add them to your mortgage loan. This guide explains the types of mortgage fees, how adding them works, and the key considerations to help you make an informed choice.
📌 Quick Answer: Adding Mortgage Fees to Your Loan
Adding fees to your mortgage means increasing your loan amount to cover upfront costs.
- Instead of paying fees from savings, you borrow the money and repay it over the mortgage term with interest
- Most common fees that can be added: arrangement fees and some valuation fees
- Main advantage: preserves your cash reserves
- Main disadvantage: you pay interest on the fees over time, increasing total cost
What Does Adding Mortgage Fees to Your Loan Mean?
Example:
If you're borrowing £250,000 with £3,000 in fees, you could either pay the £3,000 upfront or increase your mortgage to £253,000. The second option means you'll pay interest on that £3,000 over the life of your mortgage.
Types of Mortgage Fees in the UK
Understanding which fees you'll encounter helps you plan your finances effectively.
Arrangement Fees (Product Fees)
Charged by lenders for setting up your mortgage. These vary significantly between lenders and products. Some lenders allow you to add these to your loan, whilst others require upfront payment.
Valuation Fees
The lender's survey to confirm the property value. Some lenders offer free valuations, whilst others charge separately. Policies on adding these to your loan vary by lender.
Legal Fees (Conveyancing)
Solicitor or licensed conveyancer fees for handling the legal aspects of your property purchase. These typically must be paid upfront and cannot be added to your mortgage.
Broker Fees
If you use a mortgage broker, they may charge a fee for their service. Some brokers are paid by lenders, whilst others charge clients directly. Most broker fees must be paid upfront.
Other Fees
Booking Fees: Some lenders charge a non-refundable fee to reserve a mortgage rate. These are usually paid upfront and cannot be added to your loan.
Higher Lending Charge: An additional fee some lenders charge for high loan-to-value mortgages. Not all lenders impose this charge. Where applicable, it may be possible to add this to your loan.
Which Fees Can Be Added to Your Mortgage?
✓ Fees that can typically be added:
- Arrangement fees (product fees)
- Some valuation fees (lender-dependent)
- Higher lending charges (where applicable)
✗ Fees that usually must be paid upfront:
- Booking fees
- Legal fees (conveyancing)
- Broker fees (in most cases)
- Stamp Duty Land Tax
- Survey costs (separate from lender valuation)
- Removal and moving costs
Each lender has different policies, so check what's permitted with your specific mortgage product.
Advantages of Adding Fees to Your Mortgage
There are several potential benefits to adding fees to your mortgage loan.
1. Preserves Your Cash Reserves
Keeping more money in your savings can be valuable, especially after making a deposit. You'll have funds available for moving costs, furniture, renovations, or emergency expenses.
2. Reduces Immediate Financial Pressure
House purchases involve numerous upfront costs. Adding fees to your mortgage spreads these costs over time, making the immediate financial burden more manageable.
3. May Allow Access to Better Rates
Some mortgage products with higher fees offer lower interest rates. If you can't afford the fees upfront, adding them to your loan might give you access to these products.
4. Simplifies Budgeting
Everything is rolled into one monthly payment, making it easier to budget and manage your finances.
5. Maintains Your Emergency Fund
Financial experts typically recommend maintaining an emergency fund. Adding fees to your mortgage helps you preserve this safety net.
Disadvantages of Adding Fees to Your Mortgage
Whilst adding fees to your mortgage offers convenience, there are important drawbacks to understand.
1. You'll Pay Interest on the Fees
The most significant disadvantage is that you'll pay interest on the fees over the entire mortgage term. This can substantially increase the total cost over time.
2. Increases Your Loan-to-Value Ratio
Adding fees increases the amount you're borrowing relative to the property value. This could affect your LTV ratio and potentially push you into a higher rate bracket with less favourable terms.
3. Higher Monthly Payments
Borrowing more means higher monthly repayments, which could strain your budget over the long term.
4. Reduces Your Equity
You'll own less of your property initially, which could be problematic if property values fall or if you need to remortgage.
5. May Affect Future Borrowing
A higher mortgage balance could impact your ability to borrow for other purposes or affect affordability assessments for future remortgages.
6. Compounds Over Time
The longer your mortgage term, the more interest you'll pay on the added fees. Over 25-30 years, this can add up significantly.
Key Factors to Consider When Deciding
The right choice depends on your individual circumstances. Consider these factors:
Your Cash Position
If paying fees upfront would deplete your savings or leave you without an emergency fund, adding them to your mortgage might make sense. However, you'll pay more in total due to interest charges.
The Size of the Fees
Smaller fees might be worth paying upfront to avoid long-term interest costs. Larger fees might make more sense to spread over time, depending on your cash flow.
Your Mortgage Term
The longer your mortgage term, the more interest you'll pay on added fees. Shorter terms reduce this impact.
Your Interest Rate
Higher interest rates mean you'll pay more on added fees over time. Lower rates reduce the long-term cost difference.
Your LTV Ratio
If adding fees pushes you into a higher LTV bracket with worse rates, paying upfront might save money overall despite the immediate cash outlay.
Your Future Plans
If you plan to remortgage or move within a few years, the long-term interest cost becomes less significant.
Alternative Uses for Your Cash
Consider whether your money could be better used elsewhere, such as home improvements that add value, paying off higher-interest debt, or maintaining an emergency fund.
💬 Want to Discuss Your Options?
We can connect you with FCA-regulated mortgage advisers who can review your specific circumstances and discuss what might work for your situation.
How Adding Fees Affects Different Buyer Types
First-Time Buyers
Often have limited savings after making a deposit. Adding fees to the mortgage might be necessary to preserve cash for moving costs and furnishings. However, be mindful of how this affects your LTV ratio and long-term costs.
Remortgaging Homeowners
May have more equity and savings available. Consider whether paying fees upfront makes sense, especially if you're on a shorter remaining term where interest costs would be lower.
Buy-to-Let Investors
The decision might be influenced by tax considerations and cash flow requirements. Different rules may apply compared to residential mortgages.
Self-Employed Borrowers
May prefer to preserve cash for business purposes. However, ensure this doesn't compromise your mortgage affordability assessment or push you into a less favourable rate bracket.
The Impact on Remortgaging
If you add fees to your initial mortgage, this affects your position when you come to remortgage:
- Your outstanding balance will be higher than if you'd paid fees upfront
- You'll have less equity in your property
- Your LTV ratio will be higher
- You might not qualify for the best remortgage rates
- You'll still be paying interest on those original fees
However, if property values have increased, this impact may be offset by the additional equity gained through appreciation.
Strategies to Minimise Mortgage Fees
Whether you pay upfront or add fees to your loan, there are ways to reduce the overall cost.
Compare Products Carefully
Don't just look at interest rates. A slightly higher rate with no fees might be cheaper overall than a lower rate with substantial fees. Calculate the total cost over your intended mortgage period.
Negotiate Where Possible
Some fees, particularly broker fees, may be negotiable. It's always worth asking if there's flexibility.
Consider Fee-Free Products
Some lenders offer mortgages with no arrangement fees. These typically have slightly higher interest rates, but might work out cheaper depending on your circumstances and how long you plan to keep the mortgage.
Use a Broker Wisely
Many brokers don't charge clients directly and are paid by lenders instead. This can save you money whilst still getting access to a wide range of products.
Shop Around for Conveyancing
Legal fees can vary significantly between providers. Get quotes from multiple solicitors or conveyancers and compare their services.
Time Your Application
Some lenders run promotions with reduced or waived fees. Timing your application strategically might save money.
Understanding which lenders might suit your circumstances and mortgage insurance requirements can also help you make informed decisions about your overall mortgage strategy.
Frequently Asked Questions About Adding Mortgage Fees
Can I add all my mortgage fees to the loan?
No, only certain fees can be added, typically arrangement fees and some valuation fees. Legal fees, stamp duty, and most other costs must be paid upfront. Each lender has different policies.
Will adding fees to my mortgage affect my monthly payments significantly?
The impact depends on the fee amount and your mortgage term. Larger fees and longer terms mean higher monthly payments. Your lender can show you the exact difference for your situation.
Can I pay off the added fees early?
Yes, if your mortgage allows overpayments. Check your terms for any overpayment limits or early repayment charges that might apply. Learn more about overpaying your mortgage.
Do added fees affect my mortgage application?
They increase your loan amount, which could affect affordability assessments and your LTV ratio. Lenders consider the total borrowing amount when assessing your application.
Are mortgage fees tax deductible?
For residential mortgages, no. For buy-to-let properties, some fees may be tax deductible—consult a tax adviser for specific guidance on your situation.
What happens to added fees if I remortgage early?
The fees become part of your outstanding balance. You'll either pay them off when you remortgage or carry them forward to your new mortgage, continuing to pay interest on them.
Can adding fees push me into a worse interest rate bracket?
Yes, if it increases your LTV ratio beyond a threshold. For example, if adding fees takes you from one LTV band to another, you might face a higher interest rate that could cost more than paying the fees upfront.
Important Information and Disclaimer
This guide provides general information about adding mortgage fees to your loan and is not financial advice. Your individual circumstances should guide your decisions.
Always check your specific mortgage terms for which fees can be added. These vary significantly between lenders and products.
When you request mortgage advice through our website, we connect you with FCA-regulated mortgage advisers who can help you understand your options. By submitting an enquiry, you consent to us passing your information to an FCA-regulated firm for the purpose of providing you with mortgage advice.
We may receive a commission from the FCA-regulated firm we introduce you to, but we do not charge you any fees for this introduction service. Your information is handled in accordance with our privacy policy, and we do not sell your data to third parties.
For full details, please read our disclaimer page.
Key Takeaways: Adding Mortgage Fees to Your Loan
- Adding fees to your mortgage means borrowing more and paying interest on those fees over the entire mortgage term
- Main advantage: preserves your cash reserves for other expenses and emergencies
- Main disadvantage: significantly increases the total cost due to interest charges over time
- Not all fees can be added—legal fees, stamp duty, and most other costs must be paid upfront
- The decision depends on your cash position, fee size, mortgage term, and interest rate
- Adding fees can affect your LTV ratio and potentially push you into a higher rate bracket
- The longer your mortgage term, the more interest you'll pay on added fees
- Consider how added fees will affect your position when you come to remortgage
- Compare the total cost of different fee structures, not just the interest rate
- Each lender has different policies on which fees can be added to your loan
Whether you're a first-time buyer in Essex, remortgaging your home, or investing in buy-to-let property, understanding mortgage fees and how adding them to your loan works is crucial for making informed financial decisions.
