Analysis from moneysupermarket.com shows fees for fixed and tracker mortgage products have increased by over 13% since September 2009.
The comparison site is advising borrowers that the lowest headline rates are not necessarily the best value over the term of the deal and once fees are factored in, a product with a slightly higher rate but lower set-up costs may actually prove cheaper.
Clare Francis, mortgage spokesperson at moneysupermarket.com, says: “When looking for a new mortgage, it’s easy to be lured in by low headline rates, however it is vital borrowers take into account arrangement and booking fees as part of the overall cost.
’The size of the fees can vary greatly, with some providers offering fee-free deals while the set-up costs on other mortgages can run into thousands. It is therefore vital to work out the total amount you’d repay over the term of the offer.
“That said, for some people it may be worth paying a high fee in order to benefit from the lowest interest rate. It will all depend on the amount you are looking to borrow – on large mortgages a high fee can be worth paying in order to secure a low rate. However, with smaller mortgages, where a high fee will form a larger proportion of the overall loan size, it may work out cheaper to keep the set up costs low even if it means paying a slightly higher monthly payment.”