Homeowners ‘at risk of paying over odds for mortgage’

HOMEOWNERS ARE at risk of paying over the odds for their mortgage due to the vast array of “complex and unclear” fees and charges attached to such deals, according to research published today.

The consumer group, Which?, found more than 40 different names for fees and charges across the market, including “administration fees”, “application fees”, “assessment fees”, “arrangement fees”, “booking fees”, “product fees”, “reservation fees”, “lenders’ fees”, “completion fees” and “mortgage questionnaire fees”.

It said that since 2009, the year the Bank of England base rate fell to its historic 0.5 per cent low, the average arrangement fee cost has almost doubled, from £878 to £1,588.

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Which? is calling for Chancellor George Osborne to use his forthcoming Autumn Statement to make it easier for people to find the best mortgage deal by making overall costs clearer.

Executive director of Which? Richard Lloyd said: “Homeowners could be paying over the odds for their mortgage because of the complex range of fees and charges that prevent them from finding the best deal.

“The Chancellor must act now to stop sneaky fees and charges and end mortgage confusion for consumers. The Government and the regulator should also explore better ways of presenting the total cost of mortgages.”

The consumer group, which is running a “stop sneaky fees and charges” campaign to put an end to confusing and hard-to-compare charges across the financial sector, said the range of fees attached to mortgages make it hard for borrowers to compare the total cost with other deals.

Its research had found that, for example, someone borrowing £100,000 over two years could potentially save around £1,500 if they took the full set-up fees into account rather than just concentrating on the deal with the lowest rate.

The survey found lenders will often use different names for similar types of fee - for example a booking fee can also go under the name of a reservation fee or an application fee. It also found a wide variation between lenders in the cost of the same fees.