Moneyfacts.co.uk said increasing numbers of lenders were launching products marketed as low rate and high fee to attract new customers, citing Abbey, Standard Life Bank and Northern Rock as examples.
The research highlighted Abbey’s two and three-year fixed rate products at 5.19 per cent or 5.29 per cent respectively, with a booking fee of £3,999. Moneyfacts stated this was the highest flat fee in the BTL sector and as the products did not offer incentives on valuations and legal fees, total fees payable could approach £5,000.
Alan Harper, senior analyst at Moneyfacts.co.uk, said: “It’s worth bearing in mind the effect a large fee can have over the term of the deal on the overall cost of the mortgage. While getting a low rate may appear an attractive option, it does come at a price and it’s a price that’s increasing all
the time.”
Paul Hunt, head of marketing for Platform, said: “In an environment of rising interest rates and rising costs of funds, lenders are increasingly using arrangement fees to control rates. What it essentially comes down to is consumer choice. For those people with larger loan sizes, a high fee option would work out cheaper. It is up to the consumer and the broker to find the right option that best suits their individual needs.”
