This is according to analysis from moneysupermarket.com which shows the average mortgage application fee has risen by £97 since September 2009, an increase of 14% for fixed products and £118 for tracker products, an increase of 15%.
Traditionally, lenders charged a fee to cover the administration costs associated with providing a mortgage, however, in recent years many lenders have been increasing application and booking fees in order to offer lower headline rates while maintaining margins. These fees can either be charged as a fixed amount or as a percentage of the mortgage amount, sometimes up to 3.5% of the loan size, so it’s obviously important for consumers to understand how this will impact the total cost of the mortgage before applying.
Commenting, Clare Francis, mortgage spokesperson at moneysupermarket.com, said: “The mortgage market can be a minefield because of the different pricing structures lenders use. In some instances, the lowest headline rate may not actually prove to be the cheapest option because of the other charges borrowers will incur. It’s vital that prospective mortgage customers look beyond the headline rate and dig a little deeper to find out the true cost of the mortgage, otherwise they may end up paying back more than they bargained for.”
