The banks and building societies have found themselves increasingly under the microscope regarding the level of fees being charged. The focus has now switched to mortgages with the FSA reportedly unhappy with the lack of transparency surrounding Mortgage Exit Fees and gave lenders until 31 July 2007 to announce their charging strategy. Lenders have been charging borrowers £300 or more when they redeemed their mortgage to switch to a better deal, whereas the true administrative cost of closing a mortgage account is believed to be closer to £50. Many lenders have now either scrapped or reduced these fees, or agreed to fix exit fees at the level when the mortgage was originally taken out.
This might sound like good news for the 12 million mortgage borrowers in the UK, but research undertaken by Moneyfacts reveals that when fees are reduced in one area, they reappear in another form somewhere else.
In the case of mortgages, we have witnessed mortgage arrangement fees rising at an alarming rate. Five years ago we were seeing arrangement fees of around £399, but we're now witnessing arrangement fees of three times this size or even more.. So the message is to do your homework and make sure that you look at all of the mortgage fees, as these fees might wipe out any benefit from what appears to be a very competitive headline interest rate.
Moneyfacts' mortgage best buys include all fees as well as the interest rates, so that you can do a side-by-side comparison very easily.
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