Homeowners are being attacked on all fronts whether they are selling or buying a property, according to the latest industry research.
Home buyers are being warned to check the small print on their mortgage applications to ensure that they aren’t stung by high arrangement fees while those hoping to sell their homes risk paying double for estate agency fees if they neglect to read the terms and conditions of their agreements.
Estimates suggest that around two million home owners are about to come off the generous fixed-rate deals from two years ago and will be looking to take out another mortgage.
However, under the current climate, not only will they be faced by higher interest rates due to the five increases set by the Bank of England over the last year, but they will also be hit by extortionate arrangement fees.
According to a study by Moneyfacts, fees have risen by more than 50 percent over the past two years, from an average of £495 to £774. Two years ago only one deal charged more than £1000, now one in seven of all mortgages have an arrangement fee of £1000 or more. The average rate now to arrange such a policy is £2000. Eddie Wetherill, Chief Executive of the Independent Banking Advisory Service, explains: "It is yet another new and unpalatable fee. Unless they can justify that they are giving their customers any more for their money than they were two years ago, I don't see how they can get away with it. It's all about adding to their profits."
Other banks have also jumped on the bandwagon for example Abbey has just announced a record arrangement fee of £9,999 for home buyers looking at properties with a minimum loan of £500,000 and Northern Rock’s 3.5 percent fee on one of its mortgages means a fee of £17,500 for a £500,000 loan.
And when it comes to selling their home, owners who sign ‘sole agency’ agreements are also being warned that they too could end up paying out double estate agents fees even if another agency ends up selling the property on their behalf.
The OFT has warned consumers that signing such an agreement prohibits them from using an internet property retailer in conjunction with their estate agency. They could face double the fees if they decide to market their property elsewhere after signing the sole agency agreement.
The OFT has also said that internet property sites found misleading consumers by claiming that they are not estate agents could result in enforcement action.
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