Bank Fees and Hidden Charges: What to Check in a Mortgage Agreement

Bank fees and hidden charges in mortgages — quick overview 🏦

Taking a mortgage is a major step, and the contract often includes fees beyond the interest rate. This guide explains common charges, how to read the contract effectively, and practical steps to reduce unexpected costs.

Common types of fees and extra charges 📋

• Application and processing fees — charged when you submit paperwork.
• Loan origination fees — a one-time charge related to issuing the loan.
• Property appraisal fees — banks usually require a valuation and the cost can fall to the borrower.
• Insurance premiums — life insurance or property insurance may be required.
• Account maintenance or service fees — recurring charges for loan servicing.
• Early repayment penalties — possible fees if you pay ahead of schedule.
• Currency conversion charges — relevant if income or payments occur in a different currency.
• Notary and registration costs — state fees and notarial services are often outside the loan amount.

How to read a mortgage contract — step by step 🔎

1. Locate the section titled “Fees and charges.” Read every line and flag ambiguous wording.
2. Watch for phrases like “may be charged,” “including,” or “at bank’s discretion.” These create uncertainty.
3. Check who chooses insurance providers and whether you can select an alternative insurer.
4. Review the formula for any penalties and the effective dates for fees.
5. Clarify how the bank handles currency conversions and which exchange rates apply.

Essential questions to ask before signing ✅

• What one-time charges exist and when are they collected?
• Are there regular servicing fees and how often are they charged?
• Is the insurance mandatory, what does it cover, and can I choose the insurer?
• What penalties apply for partial or full prepayment?
• Which notary and registration expenses should I expect?

Practical tips to minimize costs 💡

• Request a detailed written breakdown of all fees — this gives you a basis for negotiation.
• Compare offers by total cost, not just interest rate, including likely fees and insurance.
• Ask if appraisal, notary, or registration costs can be rolled into the loan.
• Negotiate the right to choose your insurance provider — it can reduce premiums.
• If you expect to repay early, prioritize lenders with transparent or no prepayment penalties.

Sample problematic clauses and how to fix them 🛠️

• “Fees at bank’s discretion” → insist on a fixed fee amount or remove the clause.
• “Bank may charge paid services” → ask for a list of possible services with estimated costs or a cap.

Quick pre-signing checklist ✅

• You have a detailed fee schedule in writing.
• Insurance terms are clearly explained and agreed.
• Prepayment conditions are transparent.
• Notary and registration costs are identified.
• All your questions received written answers.

Final words and reassurance 🤝

Understanding fees in your mortgage contract gives you control and prevents surprises. Take time to clarify unclear points and demand transparency — it's your right as a borrower.

If you'd like professional help reviewing a specific mortgage offer or comparing options, we can assist. Browse available properties or start a property search to match financing with the right home: https://buyhome.ge/en/search

Contact BuyHome — we will help you choose a mortgage that fits your plans.