When looking for a new mortgage deal, it is vital to consider the total cost and not just the interest rate. UK homeowners typically remortgage every five years to secure the best deals, but each new mortgage can cost up to £2,000 in arrangement fees, and loveMONEY.com has found that average buyers spend £5,000 on these during a 25-year mortgage term. Buyers are advised to consider longer term deals, especially for smaller mortgages. These reduce the risk of finding remortgaging difficult if personal circumstances change, as well as potentially reducing costs.
Key Takeaways:
- Lenders have been offering mortgages with a low rate but with a massive ‘arrangement fee’ for borrowers. It is important to compare the total cost of a deal before signing up.
- Which? have said that most can expect to fork out around £1,000 on arrangement fees alone, and in some cases as much as £500 more for legal and exit fees.
- Longer term mortgages avoid the need to remortage every two years, thus limiting the number of times an arrangement fee is paid.
“And while our research doesn’t suggest that chasing the lowest mortgage and remortgage rates is always a bad idea, it does highlight the importance of comparing the total cost of a deal before signing up”
https://money.aol.co.uk/2016/11/28/homeowners-wasting-thousands-chasing-cheap-mortgage-rates/