Mortgage arrangement fees are on the up with some lenders now charging homebuyers different amounts for the administration work based on the size of the home loan being offered.

In some cases the fee is payable up front but if the sale does not proceed for whatever reason then some homebuyers will find themselves out of pocket.

The lender may also offer to add the fee to the costs of the loan, but in such instances the overall size of the mortgage increases mean that the borrower will have to pay a larger amount of interest.

Rachel McKay, mortgage analyst from moneyfacts.co.uk, said: "Lenders’ margins are getting ever tighter and consumers are more likely to switch lenders to obtain the best deal – these are the reasons that fees are increasing.

"If you think about it, with the advent of new technology and a ‘paperless office’ there should be less work involved for lenders and the cost should really be reduced accordingly.”

She added that high property prices coupled with the fees being set at a percentage of the mortgage rather than a flat fee would prove expensive for homebuyers.

"The size of the loan should have no bearing on the administration time involved in a mortgage application as long as the LTV [loan to value] and income multiples fit the lender’s criteria,” Ms McKay concluded.