Exclusive research from Moneyfacts.co.uk reveals the average mortgage arrangement fee has almost doubled during the last 2 years. Figures from November 2005 showed an average flat mortgage arrangement fee at £441, whereas today it stands at £827.
Thousands of mortgage borrowers coming off a two year fixed rate mortgage deal will be bracing themselves for higher mortgage interest charges, with the best mortgage deals over 1% higher than in 2005. But they will also need to prepare themselves to pay much higher mortgage arrangement fees, with the average mortgage fee rising 100%.
The use of percentage fees has become more common with 9% of all prime mortgage deals charging a percentage fee ranging between 0.2% and 3.5%. The highest fee from Northern Rock at 3.5% would add a massive £4,550 to an average mortgage of £130K.
The increase in mortgage fees may not automatically mean that the cost of mortgage deals has increased. What it does mean is the maze which mortgage borrowers need to navigate to get the best mortgage deal has become more complicated.
Unfortunately too many mortgage borrowers still focus their initial attention on getting the best mortgage rate, without taking full consideration of the true cost of the mortgage deal. Providers to some degree exploit this by offering a wide range of low rate, high fee mortgage deals.
With around 24% of all mortgages not charging a fee, the market certainly offers choice, no matter what type of mortgage deal you are after.
No fee, low fee, high fee and even percentage fees can offer a good mortgage deal for the right borrower. The trick is to successfully navigate the 6000 plus mortgage deals to find the best one for you. This maze of thousands of mortgages, with differing rate and fee combinations means it is more important than ever that prospective mortgage borrowers need to do their homework before committing to their new mortgage deal.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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