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What are lending fees?

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What are lending fees?

Taking out any secured or unsecured loan with a lender usually comes with added fees. While these aren’t always clearly explained or shown, knowing what they are and why you’re paying them is integral to your rights as a consumer.

In this blog, we’ll shine a light on lending or lender fees. Read on to learn about what they are, why lenders add them, where you can find them and more.

What is a lender fee?

Lending fees are any additional fees charged by a lender in addition to the amount you’re borrowing and the interest rate you’ve been offered. Some are application and processing fees, while others can be incurred during the loan term.

Most types of loans are subject to lender fees, from mortgages and second-charge mortgages (secured loans) to personal, unsecured loans.

 

Why are lending fees added?

Lenders add fees for a variety of reasons. Most are to cover the cost of administration involved with processing your application and approving your loan. For example, assessing your level of credit risk and preparing documentation takes time and money, which are expenses normally passed on to you.

Once you’ve received a loan, additional fees may still be charged in certain circumstances. For example, if you miss a payment, the cost of late payment reminder letters or issuing a default notice may incur a fee.

What lending fees are charged for mortgage and secured loan applications?

The process of applying for an unsecured loan tends to be more simple than a secured one. But lenders may still charge application and origination fees, as well as any late fees incurred during the loan term.

How much are lending fees?

This depends largely on the lender, the type of loan you’re taking out and the charges associated with it. Whether you’re paying a flat fee or a percentage of the loan amount will also factor into the specific cost for you.

We believe in being transparent when it comes to our secured loans here at Evolution Money. You can find information about our product and lending fees in a full breakdown of a representative loan example.

 

Where can I find the lender fee amount?

It’s not always obvious where to find the lending fees added for secured loans such as mortgages. This is because they’re usually tied into the total cost of a loan.

The Annual Percentage Rate of Charge (APRC) figure given to you by lenders takes into account the annual cost of a mortgage over its lifetime, including the interest rate and any additional charges.

To find specific information about lender fees, it’s always worth checking your mortgage illustration or binding mortgage offer and the terms and conditions of the company you’re looking to borrow from.

What factors determine the interest rate on a loan?

The interest rate offered by a lender depends on a few factors and your individual circumstances. Generally speaking, the greater the risk they’re taking on, the higher the interest rate they’ll charge. The factors most commonly considered include:

  • The amount you’re borrowing
  • Your chosen loan term
  • The type of loan you’re taking out
  • Your credit score and history
  • Your deposit (for mortgages)
  • The value of any assets you’re using as security (for secured loans)

How do I pay lending fees?

You usually have the choice to pay lending fees upfront or add them to the total amount you borrow. Pay them upfront if you can. Choosing the second option will increase the amount you have to pay back overall and means you’ll be charged interest on the lender fees for the duration of the loan term.

Evolution Money: secured loans with an open and honest approach to fees

Thanks for taking the time to read our blog on lender and product fees. Hopefully, you’ve learned something useful to take away with you. While you’re here, could we tell you a little more about what we do here at Evolution Money?

We’re authorised and regulated by the FCA, offering homeowner loans from £5,000 to £100,000. We could help if you’re making home improvements, buying a new car or considering your options for debt consolidation. To get started, check your eligibility for a secured loan today.

Feel free to check out our help and advice hub for more blogs and guides on a range of loan and finance topics.

Warning: Late payment can cause you serious money problems. For help, go to moneyhelper.org.uk

Representative 22.93% APRC variable.

For a typical loan of £26,600 over 180 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £484.00. This includes a Product Fee of £2,660.00 (10% of the loan amount) and a Lending Fee* of £763.00, bringing the total repayable amount to £87,030.00. Annual Interest Rates range between 11.7% to 46.5% (variable). Maximum 50.00% APRC. *Lending Fee varies by country: England & Wales £763, Scotland £1,051, Northern Ireland: £1,736.


Think carefully before securing debts against your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.

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