Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, comments: “Research from Moneyfacts.co.uk reveals that the number of fee-free mortgages has quadrupled in the last five years, increasing from 220 deals in 2010 to a staggering 902 today.

“With a quarter of the market now offering fee-free deals, it’s clear that lenders are trying to compete in other ways besides the traditional headline rate. By offering multiple product combinations, providers are almost allowing their borrowers to customise their mortgage to suit them.

“Unfortunately, too many borrowers still focus their initial attention on getting the lowest possible rate, without taking into consideration the true cost of the deal, where fees can have a significant impact.

“In many cases these low-rate deals are often accompanied by a hefty fee, which can work out as being more expensive than opting for a no-fee option.

“Many may assume that a fee-free deal is not cost-effective over the long term; however, this is not the case. In fact, the difference in rates between the average two-year fixed rate mortgage with a fee against the average fee-free deal is just 0.20%.

“It could be a costly mistake for borrowers to ignore the fee-free options, as by the end of a mortgage term they may find that they have thrown away money that would have been better spent paying off the mortgage.

“By opting for the lowest fixed rate fee-free deal, borrowers could save up to £1,500, regardless of the length of the mortgage term, when compared with the true cost of a low-rate deal with a fee.

“Borrowers trying to decipher the maze of mortgages should do their homework to work out the true cost of the deal to ensure that they pick the right one for them.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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