Beware Of Mortgage Application Fees

Borrowers are being advised to budget for mortgage application fees as costs have increased up to 22 per cent in one year, according to independent financial research.

Figures from MoneyExpert reveal the average application fee for a fixed rate mortgage have increased from £402 to £494 and on average discount mortgage fees have gone up from £354 a year ago to £407 now.

However, some fixed rate mortgages charge as much as £1,099 and some discount loans have application fees totalling some £749.

Fees have increased as mortgage lenders have sought to improve profits while interest rates remain low, according to MoneyExpert.

The bank of England base rate has remained at 4.5 per cent for 11 months in a row

"Borrowers need to budget for application fees when they take out a mortgage and particularly those who are remortgaging," said Sean Gardner, MoneyExpert.com's Chief Executive.

"What you believe is a cheap deal saving you, for instance, £100 a month won't look quite so good when you add on application fees."

Application fees are hard to avoid as out of 450 discount mortgages two-thirds charge a fee and out of 730 plus fixed-rate mortgages nearly 70 per cent charge a fixed application fee.