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Mortgage Fees
Mortgage fees have increased in the recent past as lenders keep on adding more and more charges on mortgage borrowers. In July, al mortgage fees have been increased, some by as much as £ 1000.
One of the reasons for the mortgage fee increase could be the low interest rates some lenders are offering. One lender has a product for 5.28 per cent, but this comes with a £5,250 fee. Another has a product at 6.24 per cent with no fee. Obviously, this is the better option unless the mortgage is over £250,000.
Meanwhile some lenders offer ‘fee free’ mortgages, but more often their rates are raised before the offer goes out. After the arrangement fee there could be a possible booking fee, which often come with a fixed rate mortgage added with a further amount to the cost.
Many lenders add a higher lending charge to borrowers who borrow 90 per cent plus of the property value as they are considered to be a high risk. Those with only a small deposit also come into this category. These fees have continued to be charged even though repossessions have been very low.
Valuation fee is another additional charge which basically costs approximately £200 - £300. There are three types of valuation. There is also a homebuyers report which will cost between £250 and £500 and a full structural survey which although would cost far more, it is worth in the long run.
Legal fees also add more money to the ever-increasing total mortgage fee, including searches for planning issues, flooding, mining or contaminated land. Also included would be the cost of drawing up contracts and stamp duty which has to be paid at a rate of 1 per cent on property from £120,000 to £250,000 and 3 per cent from £250,000 to £500,000 whereby it rises to 4 per cent. A £250,000 property would therefore cost £ 7,500.
Lenders may impose early repayments fees if the mortgage is paid up before the end of the term. These fees can vary greatly depending on the type of mortgage and of course which lender is used.
There is also an exit fee which is now being charged and borrowers are advised to ask about all these fees before signing contract. |
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