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Half of mortgages now have percentage fees

October 7, 2009 by admin  
Filed under News, News-Mortgages

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It has been revealed that in the current difficult mortgage market around half of all mortgages now have percentage fees attached to them, according to a recent report.

It is reported that more and more lenders have now started charging a percentage fee on their fixed rate mortgage products, with a rise of around 6 percent in the number of lenders now charging these fees.

The number of lenders charging percentage fees has gone up to 49 percent from 43 percent, and for some people this could mean thousands of pounds in fees.

The amount of the percentage fee can vary from around 0.4 percent of the mortgage loan to as high as 2.5 percent of the loan, with the percentage levels varying from one lender to another.

Furthermore, only 4 percent of the lenders that charge this percentage fee have any ceiling limit in place, which means that in most cases the fees could spiral out of control for many borrowers.

It is thought that the average percentage fee is 0.89 percent, which, on a mortgage of £150,000, would come to around £1335.

One industry official said that many people with little or no equity would end up paying these fees, stating: “Fees are often linked to loan to value ratios and anyone without a significant amount of equity in their house can expect to pay a hefty fee. Borrowers looking for a mortgage focus on rate, but fee has to be a consideration particularly when these can run into thousands of pounds. All too often we forget about the fee by rolling it straight into the loan.”

He went on to state: “Borrowers need to make a calculation as to whether they opt for a fixed or percentage fee but with the introduction of large numbers of low fee mortgages this year borrowers do have options when it comes to choosing a mortgage.”

Tags: Mortgages, half, spiral, 49 percent, borrowers, mortgage fees, mortgage focus

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Comments

One Response to “Half of mortgages now have percentage fees”
  1. mortgagemicroscope says:
    October 20, 2009 at 2:47 pm

    Great to highlight this shift in the market. It is designed to flatter with a low headline rate of interest with the application fee often stated as just a percentage in small print. When doing your research try to get results that show thte total cost over the incentive period, ie 5 year fix…total cost over the first 5 years! This will therefore confirm if it is worth paying the fee for the reduced rate of interest or just have a higher interest rate but fee free !

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