Mortgage lenders have been cutting mortgage rates in recent weeks but borrowers should watch out for the extra costs attached to any schemes on offer.
Arrangements fees have risen by as much as 70% over the last year to record highs, as lenders look to offset their loss of income from the actual mortgage repayments and maintain their profit margins.
Average mortgage rates may be cheaper than they were last year, but the cost of a typical fee attached to a new home loan has risen from £889 to £1498 according to figures from Moneyfacts.co.uk
Mortgage fees are a way of lenders spreading the overall cost of the mortgage so they can make the headline interest rate lower.
This tactic allows lenders to appear at the top of the best buy tables without harming their profitability. As a result, if you are switching your mortgage today, it is vital that the full and true costs of the loan are understood.
It is easy to forget the impact of fees because many best buy tables are ranked by rate alone.
Obtaining professional mortgage advice is therefore vital and at The Mortgage & Insurance Bureau our advisers will take the time to explain all of the costs involved in order that the best arrangement for your circumstances can be obtained.
