With over 4,500 mortgage products for borrowers to choose from it’s unsurprising that those seeking the most cost-effective deal can become confused by the array of choice available.

Assessing the overall value of a mortgage is becoming even more crucial as research from Moneyfacts.co.uk shows that borrowers are now stumping up more cash to arrange a mortgage, with the average mortgage fee today being a full £68 higher than in June 2014 - a 21-month high.

Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said:

“The current mortgage market boasts some of the lowest rates on record, which is great news for borrowers, but the increase in the average mortgage fee clearly shows that some of these headline grabbing rates are being compensated for elsewhere.

“Some of the fees borrowers are being asked to pay are nothing short of shocking, with up to £7,499 being charged for some high value loans. While arrangement fees allow lenders to offer a lot more flexibility within their ranges, the cost of administering the mortgage does not vary that greatly from one case to the next, which could lead many to wonder why there is such a big difference between the fees charged and why they are even charged in the first place. It’s certainly great news that the Council of Mortgage Lenders (CML) are involved in looking at the consistency in the market to help borrowers when they compare fees, but this will have no impact on the amount charged.

“Both providers and borrowers are keen to focus on the interest rate, which could mean that the costs of a large fee are not factored in. But high fees can have a big impact on the cost-effectiveness of a deal, particularly when they are added to the mortgage advance, which increases the amount borrowed and pushes up the size of the monthly repayments.

“In the current low-rate market, borrowers are being counselled to switch deals once their fixed rate comes to an end, but large fees can make moving to a new deal a costly affair, particularly if borrowers prefer shorter-term mortgages. Borrowers would therefore be wise to look at the true cost of the mortgage, taking into account any fees and incentive packages, to ensure that the most cost-effective deal is obtained.”

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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