The comparison site has urged mortgage customers to avoid being drawn in by low interest rates on products which have high fees, claiming that consumers could end up paying more for their borrowing than necessary.
Moneysupermarket claims that average fees have increased more than 13% since September 2009 making it more difficult for borrowers to compare the true cost of mortgages. It used statistics based on the lenders’ 2-year fixed rate products at £150,000.
Clare Francis, mortgage spokesperson at Moneysupermarket, said: “When looking for a new mortgage, it’s easy to be lured in by low headline rates, however it is vital borrowers take into account arrangement and booking fees as part of the overall cost. The size of the fees can vary greatly, with some providers offering fee-free deals while the set-up costs on other mortgages can run into thousands. It is therefore vital to work out the total amount you’d repay over the term of the offer.
“That said, for some people it may be worth paying a high fee in order to benefit from the lowest interest rate. It will all depend on the amount you are looking to borrow – on large mortgages a high fee can be worth paying in order to secure a low rate. However, with smaller mortgages, where a high fee will form a larger proportion of the overall loan size, it may work out cheaper to keep the set up costs low even if it means paying a slightly higher monthly payment.”
