Moneyfacts emphasises mortgage fee importance

05 February 2007
Buy-to-let investors lured by low mortgage rates should be careful with "low rate/high fee" products, which can end up more expensive than higher-rate products, Moneyfacts has warned.

Abbey offers low interest rates on fixed-rate deals, including two products at 5.19 per cent and three products at 5.29 per cent, but adds a booking fee of £3,999.

Factoring valuation and legal fees into the equation, total fees on these products could total £5,000,'s senior analyst, Alan Harper, warned.

Within the first three years of the 5.29 per cent deal, a customer could incur total costs of £52,289, he calculated.

The "true cost" of the product equates to the cost of a product with a 5.73 per cent interest rate, he added.

Other high fees to look out for included Standard Life Bank's arrangement and booking fee of £17,990 on a landlord mortgaging ten properties in the High Fee range, or Northern Rock's percentage fees, which rise to 2.5 per cent depending on the product rate.

Despite the fact that analysts tend to focus on providers who raise mortgage rates after increases to the base rate, a low rate deal is not the only consideration, Mr Harper concluded.

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