Beware mortgage fees!

12 December 2005
Homebuyers should be aware of arrangement fees when embarking on a mortgage, say mortgage analysts.

Financial advice website moneyfacts.co.uk says homebuyers should be aware that mortgage arrangement fees are changing and are more likely to be charged as a percentage of a mortgage instead of a fixed amount.

Rachel McKay, a mortgage analyst at moneyfacts.co.uk, says the fact fees are switching from a set amount to a percentage is "worrying".

She said: "Lenders margins are getting ever tighter and consumers are more likely to switch lenders to obtain the best deal – these are the reasons that fees are increasing. If you think about it, with the advent of new technology and a 'paperless office' there should be less work involved for lenders and the cost should really be reduced accordingly.

"With property prices at a near record levels, the trend towards fees charged as a percentage of the mortgage instead of a flat fee is both a worrying and expensive one for the consumer…"

Moneyfacts.co.uk says homeowners should be aware that: fees are part of mortgage advances and will not be given back if the application does not proceed; and since they are part of the advance are subject to interest.

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