Borrowers caught in mortgage fee trap
Nov 01, 2006
While people are becoming increasingly wary of mortgage fees, many are still being caught in the trap of putting their mortgage fees back into their loan, moneyexpert.com has claimed.
Research from the company found that mortgage providers now charge an average of £190 for basic valuation fees, with many lenders allowing borrowers to add this cost onto the cost of their mortgage. However, this can work out a lot more costly, as adding £190 onto the value of a £100,000 mortgage would mean paying an extra £400 over 25 years. It's not unusual for some remortgaging fees to reach £500 now, meaning an additional £1000 in costs if it added to the moorage in the same way. Customers should bear that in mind when considering whether to change their current mortgages.
When people move house it can be an expensive time, with a range of expenses to cover, including legal costs and redecoration, said the chief executive of moneyexpert.com. This can tempt borrowers to put fees back into the mortgage, even though this will increase costs in the long-run.
It could be the right choice for first-time buyers who were very stretched and found it difficult to get a deposit together, as long as they were aware of the costs though, he added. There was no single solution for anyone, Mr Gardner advised and borrowers needed to do their research to find out what they could afford and how they wanted to handle the costs of moving.
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