Mortgage rates are only part of the total cost of a self-employed mortgage. Fees can play a significant role, especially when alternative or private lenders are involved. Understanding these fees upfront helps avoid surprises and supports better decision-making.
This guide explains the common fees self-employed borrowers may encounter, why they exist, and when they apply.
Why Fees Exist in Self-Employed Mortgages
Fees are often tied to risk, flexibility, and administrative work. Self-employed mortgage applications usually require more document review, income analysis, and lender involvement than standard salaried applications.
Fees are not automatically higher because you are self-employed. They depend on:
- Lender type
- Income complexity
- Property value and equity
- Urgency of the mortgage
Common Lender Fees
Lender Setup or Commitment Fees
Some lenders charge a fee to set up the mortgage. This is more common with alternative and private lenders.
These fees may cover:
- Application review
- Income assessment
- Internal risk evaluation
They are usually expressed as a percentage of the mortgage amount.
Interest Rate Premiums vs Fees
In some cases, lenders charge higher interest instead of upfront fees. In others, they combine both. Understanding how costs are structured helps compare options accurately.
Broker Fees Explained
Mortgage brokers are typically paid by lenders, but in some self-employed scenarios, a broker fee may apply.
Broker fees may be charged when:
- The mortgage requires complex structuring
- Alternative or private lenders are used
- The deal involves higher risk or urgency
These fees should always be disclosed clearly before proceeding.
Legal and Closing Costs
All mortgages involve legal costs, regardless of employment type. These usually include:
- Lawyer or notary fees
- Title registration
- Disbursements
Self-employed borrowers should budget for these as part of closing costs.
Appraisal Fees
Some lenders require a property appraisal to confirm value. Appraisal fees are common when:
- Loan-to-value ratios are higher
- The property type is unique
- Private or alternative lenders are involved
The borrower typically pays this fee.
Private Mortgage-Specific Fees
Private mortgages often include additional costs, such as:
- Lender fees
- Broker fees
- Shorter-term interest structures
These fees reflect the flexibility and speed offered.
How Fees Affect Total Mortgage Cost
Looking only at the interest rate can be misleading. Fees impact the true cost of borrowing, especially for short-term mortgages.
Comparing total cost over time provides a clearer picture than focusing on one fee alone.
How to Reduce or Plan for Fees
Self-employed borrowers may reduce fee impact by:
- Improving income documentation
- Increasing equity or down payment
- Planning ahead to avoid urgency
A mortgage professional can help explain where fees apply and which options are cost-effective.
Final Thoughts
Fees are a normal part of self-employed mortgages, particularly when flexibility is required. Understanding what fees exist and why they apply allows borrowers to compare options confidently and avoid unexpected costs.
Note: Rates and costs vary based on your credit profile, available equity, and location.