Fees have gone up, is it worth paying them?

During the last 5 years we have seen a significant increase in the level of fees charged by lenders, most significantly for arrangements fees, which in 2005 were rarely above £595 but today can often exceed £2,000. However, despite higher fees the overall cost of a mortgage has actually fallen for those with low ‘loan to values’ (LTV’s). Of course, not everyone has oodles of equity; those with less equity have seen a significant increase in the cost of mortgages. 

Despite higher fees they tend not to be a barrier for those with low LTV’s, since they are often worth paying for a lower interest rate. However, do your homework on the correlation between fees and interest rate charged; it’s quite a complicated calculation, particularly for repayment mortgages, but it will reveal whether or not a higher fee is worth paying. Our true cost calculator will help you work this out. 

It is often the case that arrangement fees can be added to a mortgage. No need to worry about moving into the next LTV banding if you do this since most lenders ignore added fees for LTV purposes but there are a few other things to consider… does the lender charge a higher interest rate for the added ‘fees’ (some do) and when are the fees paid off; at the beginning or the end of the mortgage term.

Some mortgage brokers may also charge a fee to advise upon and arrange your mortgage. In the majority of cases we do not charge a fee but reserve the right to do so on some occassions, of course we always tell you if this is the case before any chargeable work is carried out.