Your Essential Guide to Comparing Mortgage Rates and Fees
Mortgage rates and fees are easier to judge when you consider what you leave behind and what it costs today. A useful comparison looks at what you pay during the deal and what you still owe when it ends.
A lower rate can reduce the monthly repayment. A product fee can absorb those savings. The right choice also needs to fit your budget, plans and the lender’s requirements.
This guide explains how to compare two deals on a consistent basis, using a worked example. When you are ready to explore products, you can compare UK mortgage rates using your property value, deposit and mortgage term.
At a glance
- Compare the same borrowing amount, repayment method, mortgage term and deal period.
- Check product fees alongside monthly repayments and any relevant incentives.
- Keep cash paid during the deal separate from the mortgage balance still outstanding.
- Include charges for leaving an existing mortgage when considering a switch.
- Use the results to inform a discussion about affordability, suitability and your plans.
Compare mortgage rates and fees on the same basis
Before comparing products, decide what the comparison needs to answer. Are you checking monthly affordability, the cash needed over two years, or the cost of borrowing during that period?
These questions are related, but they measure different things. A repayment includes interest and capital. Paying more capital reduces your debt, so don’t mistake it for an additional borrowing charge.
Use consistent assumptions for each option:
- The amount you need to borrow, before any fees are added.
- The repayment method, such as capital repayment.
- The overall mortgage term.
- The period over which you will compare the deals.
- Whether product fees are paid upfront or borrowed.
- Any applicable cashback, other charges or planned overpayments.
Changing the repayment term for just one option can make its monthly payment look more attractive without producing a fair comparison.
A worked comparison of two mortgage deals
Consider a £200,000 repayment mortgage over 25 years. Both illustrative products have a two-year fixed rate. Deal A charges 4.50% with a £1,999 product fee paid upfront. Deal B charges 4.70% with no product fee.
The purpose is to show how a rate difference and a fee interact. These are invented examples, not current lender offers.
| Comparison over the first 24 months | Deal A | Deal B |
|---|---|---|
| Initial fixed interest rate | 4.50% | 4.70% |
| Monthly repayment | £1,111.66 | £1,134.49 |
| Repayments over 24 months | £26,680 | £27,228 |
| Product fee paid upfront | £1,999 | £0 |
| Total cash paid including the product fee | £28,679 | £27,228 |
| Mortgage balance after 24 months | £190,935 | £191,181 |
| Interest plus product fee over 24 months | £19,614 | £18,409 |
Illustration assumptions: Interest is calculated monthly, with 24 equal end-of-month repayments. There are no rate changes, overpayments, cashback or other charges, including adviser fees. Totals use unrounded repayments and are rounded to the nearest pound. Lender calculations may differ.
Deal A has a monthly repayment about £22.83 lower. However, its upfront fee means the borrower’s account pays about £1,451 more over two years.
That is the first useful finding. The second requires looking at the debt remaining.
Why the mortgage balance still matters
Deal A also leaves approximately £246 less mortgage debt after two years, because more capital has been repaid.
After accounting for that difference, Deal B still has an interest and product-fee cost approximately £1,205 lower under these assumptions.
The final table row combines the interest charged during the comparison period with the separately paid product fee. Capital repayments reduce the outstanding debt, so they are excluded from that borrowing-cost figure.
This is why comparing mortgage rates and fees requires more than multiplying the displayed monthly repayment by the number of months. You need to understand what is included and what remains outstanding.
The illustration compares nominal amounts without valuing the timing of each payment. It does not establish which product a particular borrower can obtain or should choose.
Product fees need their own calculation
A lender’s product or arrangement fee is one part of the mortgage cost. There may also be booking, valuation or other charges. An adviser’s arrangement fee is a separate item to check.
Ask for a breakdown showing the amount, when it is payable and any refund conditions. Descriptions such as fee-free need context: a product with no arrangement fee may still involve other expenses.
Where the lender permits a fee to be added to the mortgage, the starting balance increases. Interest can then be charged on that extra borrowing while it remains outstanding.
In the example above, borrowing Deal A’s £1,999 fee would mean recalculating its repayments and remaining balance using £201,999. You would not also count that same fee as an upfront cash payment.
Keeping money available at completion may matter to your household. Compare that benefit with the cost of financing the fee before deciding how to pay it.
APRC and your planned deal period
APRC stands for Annual Percentage Rate of Charge. It is a standardised measure that combines interest and relevant mortgage charges over the full mortgage term, using prescribed assumptions.
Those assumptions matter. APRC reflects the product’s terms after any introductory period; it does not predict the mortgage rate you might obtain when you next switch deals.
It also does not represent every expense of buying a home. You still need a separate budget for costs outside the mortgage calculation.
Review APRC alongside a comparison over the period you expect to keep the deal. If you plan to review your mortgage after two years, ask what you will have paid and what you will still owe at that point.
MoneyHelper’s guidance on how to compare mortgage deals explains why fees and the headline rate should be considered together.
Changing the loan size changes the comparison
A fixed product fee doesn’t change just because the mortgage is smaller. A £1,999 fee is about 2% of £100,000, but about 0.5% of £400,000.
These percentages help you understand the fee’s scale. They are not APRCs or a calculation of total borrowing cost.
For the same rate difference and term, interest savings generally increase with the amount borrowed. A fee-paying product can therefore compare differently at different loan sizes. Recalculate rather than applying the result of one example to every mortgage.
The rate available can also depend on loan-to-value, or LTV: the mortgage as a percentage of the property’s value. For example, £200,000 borrowing against a £250,000 property is 80% LTV.
Changes to the lender’s valuation, deposit, or borrowing requirements can affect the comparison. When assessing mortgage rates and fees, use realistic figures and check which products apply to the intended loan.
Match the deal to your budget and future plans
A cost comparison needs to sit alongside your household budget. Consider essential spending, other debts, and the cash reserve you want to keep.
Our residential affordability calculator can help you explore borrowing assumptions. A lender will also assess your circumstances, income, and expenditure. An estimated affordable payment is not a lending decision.
The rate structure affects planning too. A fixed rate provides a set rate for the fixed period. A tracker follows its specified reference rate and margin, subject to the product’s terms. The payments on variable-rate products can change.
Read our guide to fixed and variable mortgage rates if you want to explore those differences.
Consider what may happen during the deal:
- Could you move home or need to borrow more?
- Do you expect to make substantial overpayments?
- How would a higher payment affect your budget?
- Would greater payment certainty make planning easier?
Ask about early repayment charges, permitted overpayments and any conditions for taking the mortgage to another property. Portability should not be treated as guaranteed approval for a future move.
Check the cost of switching an existing mortgage
For a remortgage, the comparison starts with your current deal. Check when any early repayment charge ends, what rate follows the introductory period and what other exit costs may apply.
Then compare the new product’s fees, legal or valuation costs, and any incentives. You may also want to consider a product transfer with your existing lender alongside a remortgage to another lender.
MoneyHelper’s explanation of remortgage costs explains why switching costs can reduce an apparent saving. Our remortgage advice explains the options to discuss before your current arrangement ends.
Take care when comparing a two-year fix with a five-year fix. A two-year total and a five-year total cover different periods. Comparing both over five years requires assumptions about the rate and fees after the shorter deal ends.
Comparing both over two years also needs care if you expect to leave the longer deal then. An early repayment charge could become relevant. The comparison period should reflect a plausible plan, with the assumptions made clear.
A practical checklist before you choose
Before settling on a shortlist, ask your adviser to check:
- The borrowing basis. Are the loan amount, repayment method and mortgage term consistent?
- The cash requirement. What is payable upfront and during the chosen period?
- The remaining debt. How much mortgage balance will still be outstanding?
- The full fee treatment. Which charges are included, excluded, financed or refundable?
- The flexibility. What restrictions could affect moving, overpaying or leaving the deal?
- The fit with your circumstances. Is the product suitable for your needs and the lender’s criteria?
Keep a note of the comparison date and assumptions. Mortgage products can change or be withdrawn, so check availability again before you proceed.
Questions about mortgage product fees
Are mortgage fees refundable if the purchase falls through
Refund conditions depend on the fee and provider. Before paying, ask what happens if you withdraw, the lender declines the application or the purchase does not complete. Product fees, booking fees, valuation charges and adviser fees may have different terms. Ask for those conditions in writing.
Will I pay another product fee when I remortgage
It depends on the new product. Some mortgages charge a product fee and others do not. Each review should include the new deal’s charges and any costs of leaving the existing mortgage. A previous fee does not automatically cover a later product or a different lender.
Can I repay a product fee after adding it to the mortgage
You may be able to overpay after completion, subject to the lender’s terms. Check how payments are applied, what overpayment limits operate and whether an early repayment charge could arise. Do not assume that planning to repay the amount later removes all interest or charges.
Turn your comparison into an informed next step
Understanding mortgage rates and fees gives you a stronger basis for the next conversation. Bring your borrowing amount, property value, preferred term and likely plans, alongside any existing mortgage details.
You can speak to a mortgage adviser to discuss the options. Connect Mortgages is part of the wider Connect Group, which also includes the Connect Experts directory.
An arrangement fee applies when Connect Mortgages arranges your mortgage. Your adviser will explain the charge and lender commission before you proceed.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Mortgage advice is provided through Connect IFA Ltd, which trades as Connect Mortgages. The firm is authorised and regulated by the Financial Conduct Authority, reference 441505.
For mortgage professionals: Join Our Mortgage Network through Connect for Intermediaries.
