Remortgage Fees Are Ever Rising
Latest Remortgage fees Figures Show By A Whopping 15% In 18 Months
If you are considering remortgaging your home in the near future, one of the major factors you will take into account will be the fees involved in such a transaction. And, it has been reported recently that application fees for mortgage and remortgage deals have risen sharply over the last year and a half.
The research from a comparison website and published in Mortgage Strategy discovered that the average application fee for a remortgage or main mortgage increased by just under £100 between September 2009 and March 2011.
The research found that over the past eighteen months, fixed rate fees for remortgage and mortgage deals increased by an average of 14 per cent, equivalent to a £97 hike in charges. Fees on tracker products increased by £118 in the same period, a surge of 15 per cent. Mortgage Strategy attributes the increase to lenders maintaining profit levels whilst trying to maintain low headline interest rates in order to attract business.
Comparing remortgage deals can be tricky when taking into account both fees and the interest rates on offer. Sometimes it can actually be worth paying a higher interest rate on your remortgage in order to benefit from a lower application or arrangement fee.
For example, on a £150,000 ‘interest only’ mortgage, you are better taking a two year fixed rate at 5 per cent with no fee than you are taking a 4.75 per cent fixed rate with a £999 fee. The lower interest rate would save you £750 over the two years but the £999 application fee would outweigh these savings.
When remortgaging it is also important that you take other fees into account, such as valuation and legal fees as well as any charges from your existing lender for repaying your mortgage early. All these fees could eat into many of the savings you will make by remortgaging to a better deal.
Experts including the Daily Mail have urged consumers to check the total costs of a remortgage deal over the period of the fixed or discounted rate. For example, for a five year fixed rate you should work out your total payments over that period before adding on any fees. The lowest ‘total cost’ deal should then be the one that you consider.
Lenders have faced tough competition over recent years to attract remortgage borrowers which is why headline interest rates – those advertised in newspapers and online – have tended to be kept very low. Booking and arrangement fees have increased by almost £100 over the last eighteen months to help lenders maintain their profit margins.
The Daily Mail reports that arrangement fees for remortgage and mortgage deals now average around £850 whilst booking fees – fees that are typically paid when an application is submitted to a lender – now average around £300.
So, the key advice if you are considering a remortgage is to make sure that you have taken all the fees and charges into account. It is easy to be tempted by a fantastic looking interest rate but sometimes it can actually benefit you to pay a higher interest rate and avoid excessive arrangement fees to a lender.
James McHeggins writes for JustRemortgages.com one of the UK’s top sites for the latest remortgage rates and best remortgage deals.
Readers were searching for:
