When a fee-free mortgage is genuinely cheaper
Lenders usually publish the same product twice: once with a low rate and a fee of £999–£1,999, and once with a slightly higher rate and no fee. Neither is a trick. Which one wins depends almost entirely on the size of your mortgage, and the crossover point is more predictable than most people expect.
The mechanism is simple. The fee is a fixed amount; the rate saving is a percentage of your balance. On a large mortgage the percentage saving easily swamps a fixed fee. On a small one it can't. The crossover on a typical fee is somewhere around £150,000–£200,000 of borrowing, though it moves with the size of the rate gap.
The break-even calculation
You can do this in under a minute and it's worth doing every time. Take the rate difference between the two versions of the product, multiply by your balance, and multiply by the number of years in the deal. That's roughly what the lower rate saves you. Compare it with the fee.
Worked example: a £150,000 balance, a fee-paying deal 0.25% cheaper, over a five-year fix. The saving is about £375 a year, so roughly £1,875 over five years — comfortably more than a £999 fee, so the fee-paying deal wins. Halve the balance to £75,000 and the saving falls to about £940 — now the fee-free version is ahead.
The approximation slightly overstates the saving on a repayment mortgage, since the balance falls over the deal, but not by enough to change the answer unless the two options are already close. When they are that close, take the fee-free one — it's less money out the door up front and less to unwind if you need to change plans.
Fee-free usually wins
On balances under roughly £150,000, on shorter deals where the fee is spread over fewer years, and whenever the rate gap between the two versions is small.
Fee-paying usually wins
On balances above roughly £200,000, on five- and ten-year fixes, and whenever the rate gap is wide.
Adding the fee to the loan is not the same as avoiding it
Most lenders let you add the product fee to the mortgage rather than paying it up front. It's convenient, and it's the reason a lot of people stop thinking about fees. But an added fee is borrowed money: you pay interest on it, and unless you overpay to clear it, you pay that interest for the remaining term of the mortgage rather than just the deal period.
A £999 fee added to a 25-year mortgage can end up costing well over £1,500 by the time it's repaid. If you're going to add the fee, include that in the comparison — or better, if you can afford to pay it up front, do.
Fees you still pay on a fee-free deal
"No fee" refers to the lender's product or arrangement fee. Other costs may still apply, though on remortgages most are commonly covered.
Valuation fee
Usually free on remortgage deals and often free on purchases too, but not universally — check the specific product.
Legal costs
Most remortgage deals include free legals. Purchases almost never do; budget £1,000–£2,000.
Exit or deeds release fee
Charged by your outgoing lender when you leave, typically under £150.
Broker fee
If you use a fee-charging broker. Many are paid by lender commission instead and charge you nothing.
Common questions
Are fee-free mortgages cheaper overall?
On smaller balances, usually yes. On larger ones the lower rate of a fee-paying product typically saves more than the fee costs. The crossover point on a typical £999 fee sits somewhere around £150,000–£200,000 of borrowing.
Should I add the mortgage fee to my loan?
Only if you can't comfortably pay it up front. Adding it means paying interest on it for the remaining term of the mortgage, which can add half as much again to what the fee actually costs you.
What's the difference between a booking fee and an arrangement fee?
A booking fee is a smaller amount paid on application and usually non-refundable even if the mortgage doesn't complete. An arrangement or product fee is the larger charge for the deal itself, normally payable on completion and often addable to the loan. Some lenders charge both.
Do fee-free mortgages have higher rates?
Typically yes — the lender recovers the cost through the rate instead. That's the trade being offered, and whether it's worth taking depends on your balance and the length of the deal.
How current are the rates on this page?
We collect product data from the lenders we track from their published information and refresh it regularly, so the fee-free products above reflect our most recent check of each lender's range. Lenders can withdraw or reprice a deal at any time, sometimes with a few hours' notice, and a rate shown here is not an offer — availability depends on your circumstances, the property and the lender's own criteria.