Content Writer
Mortgage Advisor & Director
The majority of mortgages have set up fees for their administration, which are referred to under a range of names; including mortgage arrangement fees, admin fees, product fees and completion fees. These vary in cost depending on the lender and your loan size, but it’s possible to find mortgages without any arrangement fees at all.
We look at how fee-free mortgages work, how to compare them, and whether it’s better to pay a fee on your mortgage to secure a better long-term deal.
Can you get a mortgage with no product fee?
Yes, it’s possible to get no-fee mortgages. Many lenders use this type of deal to incentivise first-time buyers, as it can reduce the initial financial outlay of buying your first home.
However, while this can be helpful for those looking to reduce their immediate home buying costs, it’s important to remember that lenders will typically balance the cost of the fee elsewhere. This usually means that low-fee and fee-free mortgage deals have higher interest rates than those with product fees.
Some buyers opt to choose a deal with a larger arrangement fee to benefit from a lower rate in the long term. While higher product fees can be unattractive, they are a one off payment, whereas the interest rate is applied to every monthly payment over the deal duration.
Compare no-fee mortgage deals online
Is it better to pay a fee upfront?
Some lenders allow you to add the product fee to the mortgage, meaning even if you opt for a mortgage with a fee, you won’t have to find such a large initial financial outlay when you buy a home. However, this does mean that you’ll pay interest on a charge that would otherwise have been interest-free.
However, a mortgage fee is simply one way the lender may choose to make money from offering you a mortgage. As previously explained, where there is no fee, they will typically make up for this loss by increasing the cost of the interest rate for the deal’s duration. When choosing whether to pay a product fee ‘upfront’ or essentially paying more to the lender through interest, it’s important to weigh up the pros and cons for you.
The table below shows an example of a no-fee mortgage from a high street mortgage lender and how it compares to its fee-carrying equivalent.
|
Metric |
Mortgage A (With Fee) |
Mortgage B (No Fee) |
|
Product Fee |
£999 |
£0 |
|
Interest Rate |
4.50% (Lower Rate) |
4.80% (Higher Rate) |
|
Monthly Payment |
£1,111 |
£1,147 |
|
Total Monthly Payments (24 months) |
£26,664 |
£27,528 |
|
Total Upfront Fees Paid |
£999 |
£0 |
|
Total Cost over 2-Year Deal |
£27,663 |
£27,528 |
This example is based on a £200,000 mortgage taken over a 25-year term, comparing two different 2-year fixed-rate deals.
When to consider paying a fee
When taking out any type of mortgage, the right product type for you will depend on your circumstances, and your priorities. If you’re interested in saving money in the short term, a fee-free mortgage can be an attractive option, but for longer term savings, a lower interest rate is likely to be more impactful.
No fee mortgages are most beneficial to those taking out relatively low value mortgages, as higher interest rates have a smaller impact on a smaller loan. However, the cost and type of interest rate you opt for can also impact how beneficial low or no fee mortgages are. For example, with a no fee fixed-rate mortgage it’s possible to calculate the difference between paying a fee upfront or paying a slightly higher rate on your repayments, as your interest rate is set. With a tracker deal, or any other variable rate mortgage, it’s difficult to gauge how much interest you will pay over the deal’s duration, as your rates could increase or decrease at any time.
Compare no fee mortgages online
Our live rates tool can help you to compare between deals with product fees versus fee free deals. Simply choose the type of mortgage you’re interested in, and within the results you’ll find that each deal has a ‘more info’ option. Click on this to see the fees associated with each deal.
This will help you to compare the best no fee mortgage deals with other deals to see which offers the best long term savings for you. If you need further guidance in comparing deals, feel free to click on the ‘enquire now’ button to speak to one of our knowledgeable brokers.
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Can you get a mortgage with no broker fee?
It’s rare to find an entirely fee-free mortgage broker, but some will consider low or no-fee options on a case-by-case basis. This is usually for particularly strong investments or large mortgage loans.
With Teito, your initial consultation is always free, so you can discuss the possibility for a fee-free deal with us before making your choice.
No fee buy-to-let mortgages
Buy-to-let mortgages tend to carry higher product fees due to their commercial nature. Around 1-2% of the loan amount is typical. While it’s possible to secure a fee-free buy-to-let mortgage, this will usually result in significantly higher rates of interest.
For help comparing buy-to-let deals, reach out to one of our specialist buy-to-let mortgage brokers today.
Why choose Teito for your no fee mortgage?
At Teito, we offer complete transparency by showing you live rates for your personal comparison. This means you can see for yourself which rates are currently available, and what the product fees are for each. However, where we really come into our own is with our bespoke service.
Our experienced brokers can help you to compare fee-free with paid mortgage deals to see which will offer you the best long term benefits. We are also popular because:
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We provide live rates from over 90 lenders
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Our brokers can often access exclusive ‘broker-only’ deals you won’t find elsewhere
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We provide a 5-star service according to Google and TrustPilot reviews
Ready to begin your mortgage journey? You can compare the latest rates yourself on Teito or take advantage of a free, no-obligation chat with one of our whole-of-market brokers, if you'd prefer to speak to an expert - get started here.
FAQs
Yes, some lenders do offer fee-free remortgages. Keep in mind, however, that the same principle typically applies, the lower the fee, the higher the interest rate.
Many people remortgage for the sole purpose of achieving the lowest rate possible, so a no fee remortgage is not usually the best path to this. However, if you’re remortgaging for another purpose, such as to release equity, it’s possible that a fee free deal would suit you.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.