Average Mortgage Application Fees up by 13* per cent Since 2009
By Moneysupermarket.com, PRNEMonday, June 13, 2011
CHESTER, England, June 14, 2011 -
Analysis Shows Borrowers Could Save Over
GBP1,100** by Looking Beyond Headline
Rates- Lower Rates Don’t Always Mean the Best
Deals - Check the Product Fees as
Well as the Interest Rates
The UK’s number one comparison site
urges mortgage customers to avoid being drawn in by low interest
rates on products which have high fees, and to consider all options
before applying, or they could end up paying more for their
borrowing than necessary.
Analysis from moneysupermarket.com shows fees for fixed and
tracker
products have increased by over 13* per cent since September 2009
making it more difficult for borrowers to compare the true cost of
mortgages. Further analysis shows products with the lowest
headline rates are not necessarily the best value over the term of
the deal. Once fees are factored in, a product with a slightly
higher rate but lower set-up costs may actually prove cheaper.
For example, the lowest two-year fixed rate is from Santander at
2.79 per cent, however, this includes a combined booking and
arrangement fee of GBP1,995, meaning the total amount to be paid
back over the two years for someone borrowing GBP150,000 is
GBP18,676*. The same amount borrowed over two years with Royal Bank
of Scotland at a rate of 2.99 and a fee of only GBP499, would cost
GBP17,552 - a saving of GBP1,124 over the two year period, despite
the interest rate being 0.20 percentage points higher.
Clare Francis, mortgage spokesperson at moneysupermarket.com
said: “When looking for a new mortgage, it’s easy to be lured in by
low headline rates, however it is vital borrowers take into account
arrangement and booking fees as part of the overall cost. The size
of the fees can vary greatly, with some providers offering fee-free
deals while the set-up costs on other mortgages can run into
thousands. It is therefore vital to work out the total amount you’d
repay over the term of the offer.
“That said, for some people it may be worth paying a high fee in
order to benefit from the lowest interest rate. It will all depend
on the amount you are looking to borrow - on large mortgages a high
fee can be worth paying in order to secure a low rate. However,
with smaller mortgages, where a high fee will form a larger
proportion of the overall loan size, it may work out cheaper to
keep the set up costs low even if it means paying a slightly higher
monthly payment.
“One thing worth noting is that it rarely proves best value to
go for a product where you the arrangement fee is a percentage of
the loan size. In fact this can prove a very costly mistake for
those looking to borrow a large amount.
“It’s almost always cheaper to opt for a product that charges a
flat fee instead, and where possible pay the fees upfront otherwise
you will also be paying interest on these too.
“When comparing mortgages you should always look at the total
amount you would repay, including fees, over the term of the deal.
This is the only way to identify which product will be offer best
value to you. Also remember to think about whether you want a fixed
or variable rate deal: there’s no point in comparing the total cost
of a two-year fix and a two-year tracker without factoring in the
possibility that your monthly mortgage repayments could change with
the tracker because the rate is linked to the Bank of England base
rate.”
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Notes to Editors
For further information, please contact:
Lisa Elliott /Jemma Green/ Duncan Skehens / Victoria Murray
Lansons Communications
+44(0)20-7294-3679 / +44(0)20-7294-3642 / +44(0)20-7566-9732 /
+44(0)207-566-9708
lisae@lansons.com /
Clare Francis
Mortgage spokesperson
+44(0)7595-067-818
Paul Lawler
PR Manager (Financial Services)
+44(0)1244-370317
.
Tags: Chester, England, June 14, Moneysupermarket.com, United Kingdom
