Soaring arrangement fees are making it increasingly difficult for consumers to find the best mortgage according to a new report by Which? Money.
With arrangement fees now averaging more than £1,000, it’s vital to compare the total cost of each mortgage you are considering and not get sucked in by a low interest rate.
Mortgage interest rates
A survey of 2,104 Which? members found that the mortgage interest rate was the main reason that one in four (26 per cent) selected their current mortgage, but this can be misleading as hefty fees can increase the cost of mortgage deals significantly.
Just one in five (20 per cent) chose their mortgage because of the overall cost of the mortgage deal. Which? has more information on mortgage fees.
A better mortgage deal
Seven per cent of those surveyed simply took out a mortgage with their bank, and almost a third (31 per cent) had never switched their mortgage.
A similar number (30 per cent) admitted they were paying their lender’s standard variable rate, although people can normally save by switching to a better mortgage deal. Which? has more information on how to get good mortgage advice.
Which? Money also found that although almost eight out of 10 of those surveyed were very or fairly satisfied with their mortgage lender, just one in five (20 per cent) were satisfied that their mortgage lender keeps them informed about better mortgage deals that might be available.
First Direct top of poll
For the second year running, First Direct was rated best in the Which? Money mortgage lender satisfaction survey, with an overall customer satisfaction score of 90%. Which? has more information on how to switch your mortgage.
Martyn Hocking, Editor, Which? Money, says: ‘The cost of mortgages has soared in the last couple of years, but a lot of the focus has been on what’s happening with interest rates when in fact it’s the total cost of the mortgage deal that’s important.
Mortgage arrangement fees
Mortgage arrangement fees are now more than £1,000 on average, and sometimes much higher, which means that an eye-catching interest rate can be misleading.
‘Whatever you do, don’t take the lazy option of simply taking out a mortgage deal with your bank or staying on your lender’s standard variable rate. If you shop around and do your homework, you could cut your mortgage costs by hundreds of pounds.’