Mortgage fees soaring

The typical mortgage fee has soared by some £600 over the last year, with buyers holding bigger deposits facing the steepest increases, a comparison website has found.

The typical mortgage arrangement fee is £1,498, up from £889 a year ago, but the rise tended to be smaller for the type of low-deposit loans sought out by first-time buyers, Moneyfacts found.

The average fee for a 60% loan-to-value (LTV) mortgage has risen by 42% to £1,562, while the fees on 90% and 95% loans have gone up by just 11% to £893 and £995 respectively,Moneyfacts said.

Borrowers with a 25% deposit face a 65% hike compared with a year ago, with typical fees standing at £1,599.

The hikes come despite lenders offering some of their lowest ever rates as the Bank of England maintains the base rate at a historic 0.5% low.

Moneyfacts spokeswoman Sylvia Waycot said: "In the excitement of buying a house, it is easy to ignore arrangement fees but this could be a costly mistake, especially if the fee is added to the mortgage loan.

"Researching the best mortgage deal should not just include the headline rate but also set-up charges and the incentives such as free legal fees."

PA