Mortgage product fee

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Posted 10th Sep 2020
Hi all, advice needed.

I have a mortgage I am ready to go for but it had a 999£ product fee.

Am I better paying this upfront (I can afford to do so) or shall I add to the total debt?

I see mixed opinions on this and the broker seemed to sway toward just add to the mortgage?

Many thanks !:)
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If you pay it upfront it’s non refundable. So if anything goes wrong you could potentially lose it. Add it to the mortgage and then make an overpayment for the amount on the first day of the mortgage so it’s not accruing interest
I over paid my mortgage from year 2. Because I read my first years statement.
Fee were added as did not have cash upfront.
In the first year I paid around £7200 and my mortgage only went down about £650.
Year 2, I over paid every penny I had.
I carried this on for the length of my mortgage.
10 years 8 months later I finished paying.
Almost 9 years mortgage free now
23 Comments
If you pay it upfront it’s non refundable. So if anything goes wrong you could potentially lose it. Add it to the mortgage and then make an overpayment for the amount on the first day of the mortgage so it’s not accruing interest
nicholasgatti10/09/2020 20:57

If you pay it upfront it’s non refundable. So if anything goes wrong you c …If you pay it upfront it’s non refundable. So if anything goes wrong you could potentially lose it. Add it to the mortgage and then make an overpayment for the amount on the first day of the mortgage so it’s not accruing interest


This, just make sure you can make an overpayment with no penalty (most do allow but check).
mds125610/09/2020 21:05

This, just make sure you can make an overpayment with no penalty (most do …This, just make sure you can make an overpayment with no penalty (most do allow but check).


Yeah can’t think of any “mainstream” lenders who won’t allow 10% pa but worth double checking the offer always.
Thanks all, that’s makes perfect sense.

I can overpay straight away, I just wasn’t sure if it was that simple and they had some complex way of charging more somehow!
I added mine to the mortgage , probably pay interest but won’t be that much
ashmac10/09/2020 22:35

I added mine to the mortgage , probably pay interest but won’t be that much


£1000 at what 2% = £20 a year over 25 years. Only £500 interest. I could be wrong.
I over paid my mortgage from year 2. Because I read my first years statement.
Fee were added as did not have cash upfront.
In the first year I paid around £7200 and my mortgage only went down about £650.
Year 2, I over paid every penny I had.
I carried this on for the length of my mortgage.
10 years 8 months later I finished paying.
Almost 9 years mortgage free now
bigwheels10/09/2020 23:11

I over paid my mortgage from year 2. Because I read my first years …I over paid my mortgage from year 2. Because I read my first years statement.Fee were added as did not have cash upfront.In the first year I paid around £7200 and my mortgage only went down about £650.Year 2, I over paid every penny I had.I carried this on for the length of my mortgage.10 years 8 months later I finished paying.Almost 9 years mortgage free now


It must have been a boring 10 years of your life. I think it’s somewhere in the middle where if you have spare cash then over pay but I wouldn’t overpay every penny I had. Everyone is different and this isn’t a criticism
mds125611/09/2020 08:33

It must have been a boring 10 years of your life. I think it’s somewhere i …It must have been a boring 10 years of your life. I think it’s somewhere in the middle where if you have spare cash then over pay but I wouldn’t overpay every penny I had. Everyone is different and this isn’t a criticism


No, I suffered from insomnia and only slept 4 hours a night.
So worked 12/16 hours a day.
Had 2 cars and a new motor bike at the time.
Just did not go abroad, thats all.
nicholasgatti10/09/2020 20:57

If you pay it upfront it’s non refundable. So if anything goes wrong you c …If you pay it upfront it’s non refundable. So if anything goes wrong you could potentially lose it. Add it to the mortgage and then make an overpayment for the amount on the first day of the mortgage so it’s not accruing interest


Who said that! NatWest better pay my £995 as they declined my application!
Wasn’t aware
Yorkshire building society told me it was refundable up until the point you actually used the mortgage and was refunded regardless of who/what the issue was
Misslovely11/09/2020 08:55

Who said that! NatWest better pay my £995 as they declined my application! …Who said that! NatWest better pay my £995 as they declined my application! Wasn’t aware


Think its more for if you get the mortgage accepted but then your buyers sale falls through so the chain is broken and you cannot proceed with your purchase.
paulj4811/09/2020 09:33

Think its more for if you get the mortgage accepted but then your buyers …Think its more for if you get the mortgage accepted but then your buyers sale falls through so the chain is broken and you cannot proceed with your purchase.


Oh I see . I got worried then because I need it back to apply with someone else
I wouldn't, plenty of decent no fee mortgages out there, I don't think you end up saving money - especially as you'll probably end up changing it in a few years.

I'm going to change to the First direct mortgage - no fees if you overpay or finish it early. The £3000 hit I will have to take by changing mortgages is worth it - I'll still save more money than staying with my current mortgage.
Misslovely11/09/2020 09:34

Oh I see . I got worried then because I need it back to apply with someone …Oh I see . I got worried then because I need it back to apply with someone else


still not 100% you'll get it back though I think it will depend on the T's&C's you've agreed too. If you where refused on that mortgage did the underwriters not say why and if you'll actually be able to apply for another anyway?
Bigfootpete11/09/2020 12:37

I wouldn't, plenty of decent no fee mortgages out there, I don't think you …I wouldn't, plenty of decent no fee mortgages out there, I don't think you end up saving money - especially as you'll probably end up changing it in a few years.




That depends on the rate as it'll be lower on a mortgage with a fee, its quite a simple calculation to see which is cheapest over the fixed period though and dependant on the borrowed amount a mortgage with a fee will normally be cheaper.
paulj4811/09/2020 12:38

still not 100% you'll get it back though I think it will depend on the …still not 100% you'll get it back though I think it will depend on the T's&C's you've agreed too. If you where refused on that mortgage did the underwriters not say why and if you'll actually be able to apply for another anyway?


They just said declined due to affordability that’s it no other clear reason on what exactly such as I was on furlough with agency but have a PT job on top or hubby is self employed and he claimed the grant etc etc
Misslovely11/09/2020 12:43

They just said declined due to affordability that’s it no other clear r …They just said declined due to affordability that’s it no other clear reason on what exactly such as I was on furlough with agency but have a PT job on top or hubby is self employed and he claimed the grant etc etc


did you do it through a broker? sounds like your case is not a straight forward one so a specialist broker could help
paulj4811/09/2020 12:46

did you do it through a broker? sounds like your case is not a straight …did you do it through a broker? sounds like your case is not a straight forward one so a specialist broker could help


Yes broker and Iv already paid him his fees as they are upfront . He said the other option to lend £128k is Barclays or Leeds
Selling my current house son it FT buyer etc
paulj4811/09/2020 12:41

That depends on the rate as it'll be lower on a mortgage with a fee, its …That depends on the rate as it'll be lower on a mortgage with a fee, its quite a simple calculation to see which is cheapest over the fixed period though and dependant on the borrowed amount a mortgage with a fee will normally be cheaper.


Can you show me an example? Of the ones I checked it worked out more expensive, most of the fees are at least £1000, so over say five years you would need quite a bit of interest rate variance on a very large Mortgage to accumulate that much extra in interest.
Bigfootpete11/09/2020 13:08

Can you show me an example? Of the ones I checked it worked out more …Can you show me an example? Of the ones I checked it worked out more expensive, most of the fees are at least £1000, so over say five years you would need quite a bit of interest rate variance on a very large Mortgage to accumulate that much extra in interest.


I'm in the process of moving to a new build. It was cheaper to pay £700 fee with Santander compared to the cheapest other non fee amounst all other lenders,this was at the end of July.
Just add it on as the comparison would have been done by the broker to factor in the extra interest.

Are you sure you can pay that much over payment as its usually no more the £500 a month unless you are on the bmr
Two fees discussed here; broker fee and product fee

Broker fee: from experience they should all be free as they earn 10% commission of the borrowed amount as stated in the mortgage in principle documents. A very few would charge if so find another.

Product fee: from experience I've done both but most is paid upfront. You'll save £££ in the long term and every penny helps especially at every renewal stage you'll most likely face a product fee.
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