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Would you prefer a low fee, high rate deal or a high fee, low rate one?

Lenders are increasingly offering split pricing on products so borrowers can opt for fee-free deals with higher interest rates or products with higher fees and lower rates. But last week MPs accused lenders of charging high fees to keep rates low and top best buy tables.

So, this week Mortgage Strategy asks Would you prefer a low fee, high rate deal or a high fee, low rate one?

Graham Parker, 49, salesman

I changed my mortgage to interest-only recently as I never want to pay it off. I would not want to pay a high fee as I’m happy to pay the loan for as long as I can and rising house prices will inevitably stand me in good stead anyway.

Amy Harris, 26, academic researcher

Initially, I would opt for an upfront fee and a low rate. Of course, I would have to get some advice before I decided one way or the other because that may not be the best thing for me in the longer term. I certainly would not trust a lender’s deals without consulting an adviser.

Ben Parsons, 19, media student

I don’t like the idea of owing more money than I have to each month so a high initial fee would be the better choice for me. You never know how long you will be paying a debt off for and there is no guarantee that you will be able to get rid of any of it early, so it’s best to assume you will be paying it off for a while.

Cypriam Rycak, 27, waiter

I would prefer to pay a higher fee but only if I could afford it at the time. If I didn’t have the means to afford it, obviously I would have to make do with the higher rate but less debt is always preferable.

Robert Cogan, 53, unemployed

A larger initial fee is the better choice as it is always nice to know that you have less to pay out each month. I like to keep my debt payments down to a minimum and spend what I save on something more worthwhile. I hate having too much debt.

Jemima McGraw, 19, art student

I don’t like a lot of debt hanging over me. I like to have control over what I pay out so a higher fee would be a better deal for me in the long run.

Jim Lake, 27, student

It’s unlikely that I could afford to pay high fees as I can’t even afford a mortgage. But a higher initial payment would be the sensible, if more difficult, choice. Andrea Wagner, 43, interior designerIt depends. If at the time I could handle a higher fee that is what I would opt for. It would mean I wouldn’t have to worry about the pressures of high payments every month.

Petra Lollkes, 42, social worker

I opted for a large fee with a previous loan and now my payments are a lot easier to handle. For me, it wasn’t a problem to find the higher fee when I took out the loan. It was a sensible choice as now I don’t have a lot to pay every month.

James Chinemana, 21, student

It’s better to get rid of debts so I would go for a big fee. Get it out of the way early and you are better off later when you might not have so much to spare.

Sam Hodgkiss, 21, student

I would go for the fee-free option. Then I would pay the debt off as quickly as I could and get it out of the way. My life plan is to keeping moving and not to have any baggage.


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