The dos and don'ts of mortgage fees

Mortgage lenders are charging customers a whopping 39 different types of fee, research from Which? has revealed.

The research found the number of charges and the level of them have increased since the credit crunch hit.

For example, arrangement fees for four in five two-year trackers at 90% loan-to-value are now in excess of £990 - a rise from one in five in 2007.

Which? discovered most lenders now charge more than 20 types of fees, on top of the arrangement fee. These include anything from booking and valuation fees, to charges for falling into arrears, changing from interest-only to repayment and even for choosing to take out your buildings insurance with someone other than your mortgage provider.

So who is the best?

The extra charges make it more difficult to source the best mortgages. A deal may look attractive but when the additional costs are included it is suddenly not such a great deal.

Andrew Hagger, a spokesperson for comparison website, says more and higher fees have become another way for mortgage providers to line their coffers.

"If you're taking out a new mortgage, the only fees you'll usually be concerned with is a product or booking fee, valuation and legal fees," he says.

"The remainder of the fees tend to kick in if there's a variation from the original mortgage agreement such as going into arrears, switching to interest only or amending the names on the mortgage. Because it's normally an unexpected change in your circumstances that prompts these changes and charges, we don't think about them unless the situation arises."




In these tough times it's vital you know what you're paying and why. Understanding how much your mortgage is going to cost is of paramount importance. The best way to cover yourself is to do your research. It may seem like hassle to learn financial jargon terms but it will help you to understand how to best compare mortgages.

Speak to an adviser

Whole of market advisers can help you to find the best deal on the market for you when all additional costs are included. Good financial advice is more important now than ever so while it's important to do your own research seeking professional advice can help you to be sure you've got the best mortgage for you.

Read the small print

Like with most things many of the downsides of a mortgage i.e. the fees will be hidden in the small print. Taking out a mortgage is probably the biggest financial commitment you'll ever make, make sure you're thorough and careful when reading through documents relating to the deal.


Go by headline rate

Financial products, whether they be loans, mortgages or savings accounts, will always be advertised by their headline rate. Companies want to draw you in. But while it's worth checking out these products be warned it's unlikely that what you see is what you get.

Accept fees without question

There are some fees you can't escape but don't think you can't question additional costs when speaking to your mortgage lender. Weigh up whether the deal still makes financial sense and whether there is another viable option.



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Your Comments

For me it is very simple - I have been in the same house for several years, and have systematically overpaid the mortgage to the point where the amount remaining has dropped to under £20K. So chasing rates is irrelevant (the difference between high and low rates is insignificant) and the charges, at current levels, are complete deal-killers.

So I will not be remortgaging any time soon.

I am on a high rate and have found a lifetime tracker mortgage which will allow me to pay the mortgage in 10 years rather than 15 for not much more per month