Are mortgage fees worth paying to secure the best rates?

When searching for a new mortgage, it's easy to focus on the headline rate. But should you be paying more attention to the mortgage fee? snapshot analysis has found that the average fee on the leading two and five-year fixed-rate deals for first-time buyers and home movers has crept up, and has jumped significantly for those looking to remortgage. 

Here, we explain how mortgage fees have changed, the cost of adding a fee to your loan, how fee-free deals differ and how to get help comparing mortgage deals.

Mortgage fees on the rise

We compared the mortgage fees of the five lowest two-year and five-year fixes, over a range of LTVs, using data from the first four weeks of January 2026 and January 2025.

Our analysis found that average fees for the best rates increased for all types of borrowers over the past year. The rise was smallest for first-time buyers, with an average increase of £13 for the best two-year fixes, or £19 when looking at five-year deals.For home movers, we found a modest uptick in fees for two-year fixed rates, but an increase of more than £100 on average for the security of a five-year deal.Those remortgaging have been hit hardest by rising fees, according to our analysis. We found that the best two-year fixed rates have average fees of £1,673. That is an increase of £475 compared to the same time last year. Last January, five-year fixed rates typically offered the best rates for those remortgaging. Now, two-year fixes offer the lowest rates. This change could be a factor behind the increase in mortgage fees we've found for remortgagers going for two-year fixes.

What's a typical mortgage fee?

 but the majority of products had fees of 

But what about the lowest mortgage rates? To find out, we analysed the fees of the five best two and five-year fixed-rate deals for a range of LTV ratios for first-time buyers, home movers and remortgagers. 

The most common mortgage fee for a leading first-time buyer or home mover deal was £999. For those remortgaging, the most common fee for top deals was higher at £1,999.

Typically, residential mortgage fees are a fixed amount, but you may also find fees that are charged as a percentage of what you need to borrow. Percentage fees are generally for properties over £750,000 and are much more common with buy-to-let mortgages.

Find out more: Listen to journalist Sam Wilson and David Hollingworth from L&C Mortgages discuss the latest research on mortgage fees in the latest episode of the Which? Money podcast.undefined

How much does it cost to add a mortgage fee to your loan?

Lenders typically offer the choice between paying your mortgage fee upfront or adding it to the total cost of your loan. So what difference does it make?

Well, a first-time buyer, borrowing £300,000 at 4% over 25 years with a five-year deal would have a monthly repayment of about £1,584. By adding a typical £999 fee to this loan, the monthly repayments increase by just over £5. Over the course of a five-year fixed term, this would cost you just over £316 more.

What about remortgage deals, which often have higher fees?

Over a two-year term, that means you pay an additional £480. because you will pay interest on top of the cost of the fee. So if you can, it's better to pay any fees up front rather than adding them to your mortgage to avoid paying interest on them for the duration of your term.Find out more: to compare costs

Are fee-free mortgage deals competitive?

Some mortgages come with no fees, but these typically have higher rates. 

So, to what extent do lenders raise rates for deals with no fees? To find out, we analysed data from our best rate tables over the past three months. 

Our research found that the lowest no-fee rate is generally around 0.1 percentage points higher than the lowest overall rate for first-time buyers or home movers. For those remortgaging, the average difference was 0.17 percentage points.

But what does this mean in terms of the monthly or yearly cost of your mortgage? 

We found that you can typically expect to pay roughly £15 extra per month, or £180 per year, if you choose a fee-free deal across borrower types when looking at two and five-year fixed mortgages.

How do you choose a deal?

So if you have to choose between a fee-free deal or the lowest rate, what should you do? It's best to work out the overall cost of the deal and go from there.

Here, we've looked at two hypothetical deals borrowing £250,000 over 25 years: 

Deal 1Deal 2

We've looked at what difference this makes if the deals lasted for two years or five years, paying the fee upfront or adding it to the loan.

As you can see, the cheapest deal over the two-year period is the fee-free mortgage, which, despite slightly higher monthly repayments, ends up being almost £700 cheaper than the market-leading rate in the first two years, if you pay the fee upfront. However,  if these deals lasted five years, the difference falls as the lower rate has longer to have an impact. 

That said, these figures would change if you were to add the fee to the loan. The lower rate from deal 1 is cheaper across both terms. But remember, this means you end up paying more in the long term, as you will likely pay interest on the fee for the term of the deal.

Generally, mortgages that offer a low rate but high fees are more likely to make more sense for those borrowing a large amount, as the fee then represents a smaller proportion of overall borrowing.

This example emphasises the importance of calculating the cost of different options with your personal circumstances, including the loan and mortgage length, to ensure you get the best deal.Find out more:

What's the APRC, and does it matter?

Most mortgages come with an introductory interest rate that lasts for a set period, often two or five years.Deals will also be advertised with an APRC, which stands for annual percentage rate of charge, and is a way of conveying the overall cost of the mortgage.How important this is largely depends on how likely you are to switch deals (known as remortgaging) at the end of the introductory period.While an APRC can be useful because it takes fees into account, if you intend to remortgage at the end of the introductory period (which is almost always the best option), it becomes less relevant.

How to get help comparing mortgages

It can be hard to tell at a glance which deal is best for you, especially when a mortgage fee is involved.Our snapshot analysis shows that borrowers shouldn't get too fixated on trying to secure the best overall rate. Instead, it's important to consider the cost of the entire mortgage deal. If it's your first time taking out a mortgage, you may also want to get help from a mortgage broker.A whole-of-market mortgage broker and ensure you get the best value for money when taking into account the headline rate, along with any fees.Find out more: 

source https://www.which.co.uk/news/article/are-mortgage-fees-worth-paying-to-secure-the-best-rates-aoQ7q8Y1I2Z0