Mortgage fees 'can swell costs of loan'

25/09/2008

Many people are unnecessarily putting themselves in deeper debt when they remortgage their homes, Which? has said.

According to the consumer group, 26 per cent of homeowners chose their last mortgage loan after selecting the cheapest headline interest rate.

However, this decision does not take into account the various fees attached to the loan - which can vary greatly.

Indeed, only one in five poll respondents were found to have taken all of these costs into consideration when picking their mortgage - and almost a third had never even switched their mortgage lender.

Martyn Hocking, editor of Which? Money, commented: "The cost of mortgages has soared in the last couple of years, but a lot of the focus has been on what’s happening with interest rates when in fact it’s the total cost of the deal that's important.

"Arrangement fees are now more than £1,000 on average, and sometimes much higher, which means that an eye-catching interest rate can be misleading."

Tags; Housing Debt and Bills, Young Family Finances,

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