Average mortgage fee up to £956
Borrowers must stump up more cash to arrange a mortgage, according to Moneyfacts, with the average mortgage fee today being a full £68 higher than in June 2014 – a 21-month high at £956.
With over 4,500 mortgage products for borrowers to choose from it’s unsurprising that those seeking the most cost-effective deal can become confused by the choice.
The average overall fee is £956 while the average fixed fee is £964 and borrowers need to cough up £933 to arrange a variable rate deal.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “The current mortgage market boasts some of the lowest rates on record, which is great news for borrowers, but the increase in the average mortgage fee clearly shows that some of these headline grabbing rates are being compensated for elsewhere.
“Some of the fees borrowers are being asked to pay are nothing short of shocking, with up to £7,499 being charged for some high value loans. While arrangement fees allow lenders to offer a lot more flexibility within their ranges, the cost of administering the mortgage does not vary that greatly from one case to the next, which could lead many to wonder why there is such a big difference between the fees charged and why they are even charged in the first place.
“Both providers and borrowers are keen to focus on the interest rate, which could mean that the costs of a large fee are not factored in. But high fees can have a big impact on the cost-effectiveness of a deal, particularly when they are added to the mortgage advance, which increases the amount borrowed and pushes up the size of the monthly repayments.”