Consumers warned over high fees on mortgages
With interest rates still high and consumer affordability stretched many people looking to remortgage or take out a new home loan are looking out for competitive headline rates to try and get the best deal possible at a financially difficult time. However, industry experts have stated that consumers need to be careful that they do not take on a mortgage based purely on the headline rate, as they could otherwise find that they are pulled in by what looks like an attractive rate of interest but are then left facing huge arrangement fees and costs.
Officials have warned that some low rate mortgages are charging huge fees of up to £4000 in some cases. Consumers are warned that competition amongst mortgage providers has started to increase again, and whilst many are looking to try and entice fresh customers with low rates on some mortgage products they are also recouping some of the losses through charging the higher arrangement fees.
One industry official said: ‘The sudden switch to more competitive fixed rates demonstrates that the mortgage market continues to be volatile. Fixed rates are back but eye-catching deals at less than 5% will often come with massive fees and borrowers need to be careful. The market changes day by day.’
Consumers are also reminded that the amount of deposit required for the lower rate mortgages can also be far higher with many lenders, and some consumers may be looking at finding a deposit of 20% or more of the property value in order to get a more affordable rate of interest. Borrowers are advised to check on the deposit levels and arrangement fees as well as the headline interest rate being advertised.
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