Mortgage borrowers in the UK are increasingly being stung by hefty application and booking fees as they come to progress their home loan procedures, according to new figures on the subject. As a result, the advice from experts is for existing and aspiring homeowners alike to look beyond headline rates of interest and consider the other potential charges they’ll face while weighing up the options available.
And the importance of the point is highlighted very clearly by figures from Moneysupermarket.com that show fees charged by lenders on fixed or tracker mortgages have increased steeply in recent years. Indeed, the comparison service points to a 20 percent increase in the scale of overall application and booking fees being charged to each customer since September.
The conclusion from Monseysupermarket.com’s analysts is that very often these days a mortgage deal with a lower headline rate of interest will end up costing borrowers more over a two-year period than a similar deal with a higher headline rate but lower fee requirements.
“It’s very easy for borrowers looking for a new mortgage to be attracted by low headline rates; however it is vital to consider the account arrangement and booking fees as part of the overall cost,” commented Moneysupermarket.com’s mortgage expert Clare Francis. “Fee costs can vary greatly between providers so taking the time to work out the total amount you have to repay over the term of the offer is essential.”
Of course, there are always likely to be a good number of mortgage deals available that do offer the best value to consumers on the basis of competitively low interest rates. But the point from the price comparison service, among others, is that borrowers need to shop around to find the best value on the market and should consider more than simply the rates of interest involved.
The issue of the fees associated with mortgage deals and the discrepancies that can appear between lenders has risen in significance in recent years as a competitiveness issue because borrowing costs have generally been held low by all providers in line with the Bank of England’s base rate of interest. The trouble for would-be homeowners however since the onset of the financial crisis has been generally securing the loan deals they’re after, rather than finding deals with competitive rates of interest.
