Mortgage Fees Up Thursday, 26th January 2012

Moneyfacts has found that mortgage fees have risen by 68.5% over the last 12 months despite interest rates at a historic low of 0.50%.

Whilst the fees on 90% and 95% loans have risen by 11%, the average fee for a 60% LTV mortgage has risen by 42%.

“When making regular purchases it is easy to spot a bargain or disregard less competitive deals but this is much more difficult when making a very large one-off purchase such as a new home.In the excitement of buying a house it is easy to ignore arrangement fees but this could be a costly mistake especially if the fee is added to the mortgage loan.” Sylvia Waycot, spokesperson for Moneyfacts said that buyers need to ensure they add fees to their mortgage loan.

“Last year there was a choice of 283 mortgages across the range of LTVs that did not charge arrangement fees, today that number has risen to 343, however, very little is for free and no arrangement fee could mean a higher overall loan rate.“The only way for buyers to properly compare is to ask their adviser for a ‘true cost’ projection which takes into account all payments over the life of the mortgage."

Waycot added that when buyers are researching the best mortgage deal, they should not just include the headline rate but also set up charges and the incentives such as free legal fees.