Mortgage application fees double

Mortgage application fees double

In the last three years fees for mortgage applications have almost doubled, new figures out this week reveal.

Since 2004 the average fixed application fee for a fixed-rate mortgage has risen from just under £350 to just over £600, data from an online source reveals.

Consumers need to not only take account of the headline mortgage rate, but also the application fee at the outset according to a financial research firm.

If the mortgage is small, the application fee will inflate the true cost by quite a large amount. If the mortgage is relatively larger then a fixed application fee should be a lot less.

Lenders can manipulae their positions in best mortage tables. Such lists are usually based on mortgage interest rates only. Therefore, by increasing the application fee instead of the interest rate, lenders are able to increase the real cost of the mortgage."

It is not only fixed application fees that need attention; variable application fees can also catch consumers out.

For example, Northern Rock's two-year flexi, fixed-rate mortgage at 3.99 per cent comes with an application fee of 3.5 per cent of the loan, so on a £250,000 mortgage it would cost £8,750.

Cosumers need to do their sums to accurately calculate the total cost of a mortgage, including all of the fees in order to make reliable comaparison.