When you were young and would dream about your ideal home, you certainly didn’t think about things like searching the internet for the right place, visiting a lot of places to find a lot of bag options, and of course, preparing to meet your mortgage lender with the hopes of leaving with an approved application!
While it’s too late to go back and adjust your dreams, if you are about to meet your mortgage broker or lender, this article can help with information about some of the most common fees you will encounter.
Also known as an application fee or a startup fee, this is a charge which you will have to pay before your mortgage broker has even had a chance to check your credit history and score. And while it can seem a little harsh to pay a few before the process is underway, this fee is important.
In order to process your application, each lender is required to undertake a number of due diligence checks to confirm information and to obtain clearances and checks. As you can imagine, each step of this administrative process incurs a fee, and you can be sure that the mortgage broker will be passing it on to you.
If you were planning on putting any of your corporate bonuses or incident forms of income towards your mortgage repayments then you had best ask your lender if they will charge a fee for this.
When a lender processes your application, they calculate how much profit they will make from your interest. This helps to decide if they will approve your mortgage or not. However, if you start to make additional repayments during the course of your mortgage then it directly affects their projected income. As you can imagine, most lenders don’t like this idea and will often charge you a fee to discourage the practice.
While the chances are that you have already chosen and obtained your own property inspection and report, your lender is also going to want one of their own. You see, providing a mortgage isn’t like shopping the Groupon Coupons page for Charles Tyrwhitt where you can be confident that you will receive high-quality products. Instead, a lender needs to hire a property inspector to ensure that the house you want to buy can be sold to recover any owed funds, should you cease to make your repayments.
Finally, it’s the loan administration fee. The pain with this fee is that it is charged every month, and can often increase a few times during the course of your mortgage. Similar to your application fee, this fee covers administrative charges associated with maintaining an active mortgage account. For example, tax reporting obligations and similar will all require personal administrative input, which comes at a cost.
Just because there are a lot of fees during the mortgage application process shouldn’t turn you off applying. Instead, feel good that you are prepared with these four items and do what you can do research more before your first meeting.