Mortgage fees have doubled
Over the last 2 years mortgage fees have almost doubled according to new research from Moneyfacts.co.uk
In November 2005 the average mortgage fee was £441 and today it’s at £827. Not only have fees risen but 9 per cent of fees are now a percentage fee – where you’re charged a percentage of the total amount you borrow.
Mortgage Analyst from Moneyfacts.co.uk, David Knight said “Thousands of borrowers coming off a two year fixed rate will be bracing themselves for higher interest charges, with the best deals over 1% higher than in 2005. But they will also need to prepare themselves to pay much higher fees, with the average fee rising 100%.
“The use of percentage fees has become more common with 9% of all prime mortgage deals charging a percentage fee ranging between 0.2% and 3.5%. The highest fee from Northern Rock at 3.5% would add a massive £4,550 to an average loan of £130K.
“The increase in fees may not automatically mean that the cost of the deals has increased. What it does mean is the maze which borrowers need to navigate to get the best deal has become more complicated.
“Unfortunately too many borrowers still focus their initial attention on getting the best rate, without taking full consideration of the true cost of the deal. Providers to some degree exploit this by offering a wide range of low rate, high fee deals.
“With around 24% of all mortgages not charging a fee, the market certainly offers choice, no matter what type of deal you are after.
“No fee, low fee, high fee and even percentage fees can offer a good deal for the right borrower. The trick is to successfully navigate the 6000 plus deals to find the best one for you. This maze of thousands of mortgages, with differing rate and fee combinations means it is more important than ever that prospective borrowers need to do their homework before committing to their new mortgage deal.”