A recent report has shown the alarming rate by which mortgage fees have been rising over the past couple of years, with many consumers being hit by extortionate fees on their mortgages. The reports suggest that some mortgage lenders have raised their arrangement fees by as much as 600%, even though the cost of arranging a mortgage has not risen in the past two years. In fact, as some experts point out, computerized systems have made the cost of mortgage arrangements even lower, yet some lender have still raised their fees by enormous amounts.
Many lenders advertise their mortgages with attractive interest rates, and this not only puts them onto the best buy tables but also leads to more consumer enquiries from people that do not look beyond the interest rate and therefore assume that they are getting a great deal. However, experts are warning consumers not to go by face value and to look at the arrangement fees charged by the lender before they make a commitment.
According to one industry professional: ‘Lenders know that people tend to judge mortgages based on the headline interest rate. Consequently, they can use this to offer what appears a good home loan only then to introduce the arrangement fee as a sting in the tail. The fees have soared in the last few years, but there has been no increase in the amount of work involved to arrange a mortgage. There is no way the fees can be justified in terms of the work involved.’
Many experts are confused as to why certain lenders have raised their fees by such a huge amount, which in some cases has equated to over £2500 in the space of two years.
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