Remortgages Are Going Up, But So Are The Fees, A Whopping 15% In The Last 18 Months Alone

Remortgages are on the increase due to spiralling inflation increases, but there is a little monster lurking. It has recently been in the press that remortgage deal fees have increased over the eighteen months by 15%.

Between September 2009 and March 2011 the average application fee charged on mortgage and remortgage products in the UK increased by just under £100. That's the findings of recent research from a leading price comparison website and featured in the specialist finance publication Mortgage Strategy.

The data showed that fees on tracker rate mortgage deals have increased by 15 per cent over the last year and a half, equivalent to £118. Fixed rate fees rose by almost as much, with arrangement fees increasing by 14 per cent (or an average of £97) over the same period. Lenders trying to maintain profit margins whilst offering attractive rates to lure borrowers was the main reason for the increases, reports Mortgage Strategy.

Of course, this news is important to the many people who are now looking to remortgage in light of the news that the Bank of England base rate is due to increase later this year. Those applying for remortgages are likely to be hit harder by these new increased fees.

Some experts say that in some circumstances, you would actually be in a better position by paying a slightly higher interest rate in order to keep the fees lower, as very few people stay on the same mortgage product for the entire term of their mortgage. It's just not the modern way.

You should also look out for any additional fees which may eat into any savings you make by remortgaging. You may have to pay some conveyancing or valuation fees as part of the process, both of which could mean that you end up saving much less in total than you previously thought.

When comparing mortgages, it is advisable not to look at the total cost of the mortgage over the entire term, but to compare using the total cost over the term of your introductory rate or fixed period. This is because that is a more realistic approach, as you are likely to remortgage again once your fixed discounted period is over.

It has been a difficult market place over the past few years for lenders in the economic climate that we as a country faced, and so it is reported that the lenders are now slowly increasing their fees in order to keep their profits at a level that will sustain the business.

£850 is now the average arrangement fee for a mortgage or remortgage product according to figures from the Daily Mail. The newspaper also found that the average booking fee (generally payable at the start of the mortgage process when an application is submitted) is now around £300.

So, the key advice if you are planning a remortgage deal is to ensure you know about all the charges and have taken them into account. It is easy to be swayed by a great looking interest rate but beware the small print. Sometimes it can actually benefit you to pay a higher interest rate and negate excessive arrangement fees and charges.


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Timothy Frodsham writes for JustRemortgages.com one of the UK's top sites for the latest remortgage rates and best remortgage deals.