Mortgage Fees Are on the Rise - What Buyers Need to Know in 2025
Spring is usually the busiest season for the housing market. Lighter evenings, improving weather, and a fresh sense of momentum tend to bring buyers and sellers out in force.
But for today’s buyers - and for homeowners looking to remortgage - the landscape has shifted. It's not just about interest rates anymore. The fees attached to securing some of the most competitive mortgage products have been creeping up in recent years, and they now play a big role in the true cost of a loan.
So what’s changed - and what should you look out for when choosing your next mortgage deal?
Mortgage product fees are higher than before
According to data from Moneyfacts, the average product fee on a fixed-rate mortgage is now £1,121 - up by £81 compared to five years ago. These are fees charged by the lender simply to secure a particular interest rate. They're separate from your legal or broker fees, and in many cases, you can choose whether to pay them upfront or add them to the loan.
The number of mortgage products with no fee has also fallen, from 41% in 2020 to 36% in 2025. Fewer deals now include extras like cashback, which used to help offset these costs.
Some high street lenders are currently offering deals with fees of £1,999 or more. In certain specialist lending cases, fees can even go above £3,000 - although that’s rare and usually applies to more complex mortgages.
Why do lenders offer multiple versions of the same product?
Many lenders now offer a choice of rate and fee combinations. For example:
4.25% interest with a £1,495 fee
4.50% interest with a £999 fee
4.75% interest with no fee
At first glance, the lowest interest rate may seem the best deal. But depending on the size of your mortgage, it could be more cost-effective to choose a slightly higher rate with a lower fee - especially if you’re borrowing less or planning to move again in a few years.
For larger loans, paying a bigger fee in exchange for a lower rate can save money over time. The key is to compare the total cost over the term of the deal, not just the headline interest rate.
Is it better to pay the fee or go for a no-fee deal?
It depends on your loan size, your budget, and how long you plan to stay in the property.
As an example, a £450,000 loan over 25 years might offer:
4.33% with a £1,495 fee
4.38% with a £995 fee
4.54% with no fee
Over a two-year term, the no-fee option could actually cost more overall than the slightly higher-rate version with a smaller fee. That said, if you’re tight on upfront costs, the no-fee version might be more manageable month-to-month, even if it costs more in the long run.
The same goes for five-year deals. Some people could be tempted by the lower rate, but in reality, they’d be better off paying a bit more monthly and avoiding a large fee altogether. Others will save significantly by paying a fee upfront, especially if the loan is large.
What does this mean for buyers in 2025?
With average UK house prices around £270,000 - and much higher in places like London - mortgage choices can make a big difference to your overall affordability.
If your current deal is ending soon, or if you're buying your first home, it’s important to think beyond the interest rate. Ask yourself:
What’s the total cost over the term?
Can I afford the fee upfront?
Does adding the fee to the loan make sense?
How long am I likely to stay in the property?
In some cases, stretching to pay the product fee will be worthwhile. In others, keeping fees low may give you more financial breathing room, especially when factoring in other costs like moving, furnishing, or legal work.
A changing market - but still full of opportunity
This year, hundreds of thousands of fixed-rate mortgage deals secured at ultra-low rates will come to an end. As those homeowners remortgage onto higher rates, it’s more important than ever to assess all the costs - not just the rate itself.
If you're buying your first home or considering a move, the mortgage market can feel like a maze. That’s why it helps to get clear advice before locking anything in.
At & Co, we work closely with experienced mortgage advisors who can help you break down the numbers, compare options, and decide what’s genuinely best for your situation.
Want to explore your mortgage options?
Let us know and we can connect you with someone we trust. No pressure, no jargon - just real help when you need it.
This article is for general information only and does not constitute financial advice. Please speak to a qualified advisor before making any decisions relating to your mortgage or finances.
