Mortgage fees increase by 600%

Permalink: Mortgage fees increase by 600%
by Kay Murchie

Moneyfacts.co.uk, the personal finance website, have declared that mortgage fees charged by some leading lenders have rocketed in the last 2 years but the amount of work involved to arrange a mortgage has not changed.

For example, some lenders inflict higher charges on home loans that are only available via brokers. Abbey mortgages sold direct to the public have a maximum fee of £995, but it can charge up to £1,499 through a broker. The maximum fee charged by the Scottish Widows bank (part of Lloyds TSB) has risen around 678% in 2 years from £295 to £1,999. Huge increases have also been noted at the Woolwich (now part of Barclays), Nationwide and Northern Rock.

Many have started charging an arrangement fee based on a percentage of the size of the loan, with someone borrowing £500,000 paying 5 times as much as someone borrowing £100,000. Moneyfacts.co.uk commented that homebuyers are being tempted into what seem to be good value mortgage deals only to be hit with hefty charges.

Intelligent Finance, a subsidiary of the biggest mortgage lender, the Halifax, charges nearly £3,000 for an arrangement fee. This is up by 601% on the maximum it charged just 2 years ago.

According to moneyfacts.co.uk, the cost involved in arranging a mortgage could not have increased by £2,500. On the contrary, with the aid of computers, the fee may well have dropped.