You are here: Home - Mortgages - Buy To Let - News -

Mortgage application fees rocket 20%

Written by:

Mortgage customers could be paying over the odds for borrowing due to high fees, according to a report by

The research found mortgage products had increased by around 20% since 2009, meaning consumers now found it more difficult to judge the real cost of their mortgage.

It added that products with the lowest interest rates would often turn out to be poor value when fees and charges were added, unless true cost figures are used to compare deals.

“For example, the lowest two-year fixed rate mortgage is from HSBC at 2.64%. However adding the combined booking and arrangement fee of £1,999 means the total amount to be paid back over the two years for someone borrowing £150,000 is £18,404.20.” the study said.

“The same amount borrowed over two years with Bank of Ireland at a higher rate of 2.78%, and a fee of only £799, would cost £17,461.48 – a saving of £942.72 over the two year period, despite the interest rate being 0.14 percentage points higher.”

Andy Pratt, chief operating officer at mortgage brokerage Alexander Hall, commented:

“The market is a different playing field to how it has been in the past. But while the cost of mortgages has gone up, it doesn’t necessarily mean clients will pay more when fees are paid up front.

“Lenders have increased upfront costs to make sure their initial costs are covered, with more focus on the initial application. “The different structures for fees mean there is now even more reason to consider a broker, especially if things have changed since the last time a client took out a mortgage.”

Clare Francis, mortgage expert at, added:

“It’s very easy for borrowers looking for a new mortgage to be attracted by low headline rates; however it is vital to consider the account arrangement and booking fees as part of the overall cost.

“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.”

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week