Mortgage application fees up
Dec 04, 2006
The cost of taking a mortgage out has more than doubled in the last three years, and fees are now up to an average of £634, a new study has revealed.
Comparison website Mform has discovered that alongside rising application fees are exit fees that have gone sky-high. More than two in three lenders charge over £200 now to finish a mortgage, whereas three years ago such prices were unheard of.
Mform said that when home buyers choose a mortgage, it is important to look beyond the rate. It is now common practice that mortgages with the lowest rates have the highest application fee, exit fee, and the least-flexible terms for borrowing, they explained.
The desire to keep interest rates low and in line with competition is also an incentive to increase application fees across the industry.
Competition is so fierce between lenders to earn home buyers' business that though rates have increased from 4.29 to 5.41 per cent in the last three years, the Bank of England rate rises during the same period dictate the rate should be at least 5.79 per cent – 0.38 higher than the current average. Mform concluded consumers should consider a variety of factors before deciding on the 'right' mortgage.
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