Mortgage application fees: amount, calculation and negotiation

Application fees charged by the lender to grant you a mortgage

What are mortgage application fees?
How much are application fees and how are they calculated?
Are mortgage application fees negotiable?
Application fees and other costs linked to a mortgage

When setting up a property financing, certain costs are added to the loan amount itself. Among them are the application fees, charged by the bank or financing institution to review and set up the credit transaction.

These fees correspond to the administrative processing of the application: reviewing the borrower’s financial situation, analysing the property project, checking the guarantees and preparing the contractual documents. They allow the lending institution to cover the costs linked to reviewing and managing the financing.

Below, we will look at what mortgage application fees correspond to, how they are calculated and in which situations they may be negotiated, so that you can better understand their impact on the overall cost of a property financing.

What are mortgage application fees?

Application fees correspond to the costs charged by the lender to review and set up a mortgage. They cover all the administrative steps required to grant the financing.

When a borrower submits a loan application, the lending institution (bank, insurance company, pension fund) must analyse various elements in order to assess the risk and structure the transaction. This stage includes, in particular, reviewing the borrower’s financial situation, examining the property project and checking the proposed guarantees.

These fees are used to cover several operations:

the analysis of borrowing capacity and the debt ratio
the review of financial documents (income, assets, expenses)
the valuation of the financed property
the setup of the mortgage or the mortgage certificate
the preparation and management of contractual documents

In Switzerland, terminology may vary from one institution to another. Banks sometimes speak of administrative fees, mortgage processing fees or financing setup fees. Even if the terms differ, they always refer to the costs linked to setting up and managing your mortgage application.

Who pays the application fees for a mortgage?

Application fees are generally borne by the borrower. They are part of the costs linked to setting up the property financing and are charged by the lending institution to cover the administrative procedures required to grant the credit.

Depending on the bank, these fees may be paid at different stages of the financing process.

In most cases, they are requested:

when the loan offer is accepted,
or when the mortgage is set up and the funds are released.

Some banks may also choose to include these fees in the financing amount. In that case, the borrower does not pay them immediately, but they are included in the overall cost of the mortgage.

How much are the application fees for a mortgage and how are they calculated?

The amount of the application fees depends mainly on the bank or the financing institution. Each institution applies its own pricing policy, which explains the differences sometimes observed between several mortgage offers.

In Switzerland, these fees generally remain limited. In most cases, administrative fees linked to a mortgage range from around CHF 100 to CHF 1 000, depending on the bank and the complexity of the application.

Institutions may, however, use several methods to determine these fees.

A flat fee

This is the most common approach in Swiss property financing. The bank applies a fixed amount to process the application, regardless of the loan amount.

Depending on the institution, this flat fee may, for example, range between CHF 250 and CHF 750.

The advantage of this system is its transparency: the borrower immediately knows the amount to be paid when the financing is set up.

A percentage of the borrowed amount

More rarely, some institutions may calculate the application fees according to the amount of the mortgage.

The bank then applies a percentage of the financing, for example 0.5% of the borrowed amount, in which case:

a mortgage of CHF 600 000 would result in around CHF 3 000 in fees,
a mortgage of CHF 900 000 would represent around CHF 4 500.

Use our mortgage calculator to simulate your mortgage.

Are the application fees for a mortgage negotiable?

In many cases, the application fees can be negotiated with the bank or financing institution. Even if these fees appear in the institution’s fee schedule, they are not always completely fixed.

In practice, some banks agree to reduce or waive these fees as part of an overall mortgage negotiation. This flexibility nevertheless depends on several factors, notably the borrower’s profile and the competition between financial institutions.

A strong borrower profile

A borrower with a stable financial situation generally has stronger negotiating power. Banks may be more accommodating when the application presents a low level of risk.

Several factors may work in the borrower’s favour:

regular and stable income
a significant down payment
a stable professional situation
controlled debt levels

In this context, the bank may agree to make a commercial gesture in order to secure the financing.

Competition between banks

Comparing several mortgage offers often makes it possible to obtain better conditions, including on certain additional fees.

When several institutions compete to finance the same project, they may agree to reduce certain administrative fees in order to make their offer more attractive.

This approach also makes it possible to compare all the financing conditions: interest rate, loan term, repayment flexibility and additional fees.

Using a mortgage broker

Working with a specialised broker in property financing can also make negotiations easier. Thanks to the broker’s knowledge of the market and relationships with partner lenders (banks, insurers, pension funds), the broker can often obtain more advantageous conditions for the borrower.

In most cases, the broker is paid directly by the lending institution; these services are therefore free for you. If that is not the case, for example when the broker recommends a mortgage that is attractive for you with a lender who does not pay them, they will let you know.

Find out what a professional mortgage broker can do to help you obtain your mortgage on the best possible terms.

Application fees and other costs linked to a mortgage

Application fees represent only a small part of the total cost of a property financing. When buying property in Switzerland, several other costs must also be taken into account in order to assess the project’s overall budget correctly.

These costs vary according to the canton and the structure of the financing, but they may represent a significant amount.

Notary fees and registration charges

When buying a property, the intervention of a notary is generally necessary to formalise the transaction and proceed with the various legal registrations.

These costs include in particular:

the notary’s fees
registration charges (land registry fees)
property transfer taxes

In Switzerland, all these purchase costs generally represent between 3% and 5% of the property price, depending on the canton.

Costs linked to the mortgage certificate

Setting up a property financing generally requires the creation or use of a mortgage certificate, which serves as security for the loan.

Its creation or modification also leads to certain costs, in particular:

notarial costs linked to issuing the certificate
registration fees in the land registry

These costs may vary depending on the canton and the amount of the guarantee.

Mortgage brokerage fees

In some projects, the borrower chooses to work with a mortgage broker in order to compare offers from different banks and negotiate the financing conditions.

Depending on the broker’s remuneration model, these costs may take different forms: