Buyers confused by mortgage application fees
Tuesday, 5 April 2011 2:44 PM
Mortgage application fees have turned Britain into a nation of confused borrowers, with administration costs rising by almost £100 since September 2009.
Despite the Bank of England base rate staying at an all-time low of 0.5 per cent throughout that time, the headline charges associated with mortgages have steadily crept up.
According to price comparison site MoneySupermarket.com, the rise has happened because lenders have been attempting to recoup some of the profit that they lost from monthly mortgage payments when they offered competitive interest rates.
Mortgage spokesperson Clare Francis said this meant the best headline rate might not lead to the lowest cost loan overall.
"Low interest rate products might seem like the obvious choice," she said. "However, they don't necessarily offer the best option for consumers."
In particular, borrowers were advised to look out for fees charged as a percentage of the total amount taken. These can have a particularly strong effect in increasing the cost of the loan, Francis warned.
Instead, would-be homeowners might be wise to make sure they are comparing the total cost of the loan – including the upfront fees and the monthly repayments – when deciding which deal is the best for their needs.
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