Mortgage fee misery

Frugally speaking, I’m feeling disgruntled today and I’ll tell you why. You’ve probably heard experts say that the area of your finances in which you could make the biggest savings is your mortgage, if you have one. That makes sense doesn’t it? It’s probably the biggest monthly outlay for most people, so finding the right deal could save you thousands of pounds over the life of the loan.

DJ & I are coming off our two year discounted variable rate and our mortgage rate will soon rise to 7 per cent. Ouch! So, I’ve been speaking to brokers to find a new deal.

Remortgaging is such a hassle. You have to read through all the small print and find out if the deal is really as good as seems, and then there are all the irritating fees. The survey, broker’s fees – if you’re paying for the advice – and everything else the greedy lender throws on top. As if they’re not making enough money! But at least in the past I’ve had the satisfaction that our repayments will be cheaper or we’re getting a good deal. Click here to see MSN and Moneysupermarket’s mortgage best buys.

This time around, it’s a different story. Despite the Bank of England’s rate cuts, lenders have raised rates and good deals are scarce. Plus there are additional stings in the tail. When I read through the small print of one deal my broker offered, I was stunned to see my existing lender wants to charge a £999 ‘arrangement’ fee. Now, when I bought my first flat I was charged such a fee, which was added to the mortgage, for borrowing 95 per cent of the loan to value. But when we bought our house we had a 10 per cent deposit so we didn’t pay such a fee.

When I queried it the broker told me most lenders are charging these extortionate fees now. Not wishing to take his word for it, DJ and I surfed the internet for other deals and were shocked to find he was right.

We have 21 years left to run on our mortgage, so if we remortgaged every 2 years we could end up with over £10,000 in fees added to our mortgage! And that’s not counting the interest we’d pay. Needless to say, I am not happy but struggling to see what our options are. We may want to move house in a couple of years so we don’t want to be tied into a fixed or discounted variable rate of more than 2 years really because of the redemption fees.

With mortgage approvals falling, lenders are evidently trying to make as much money as they can from the few customers they can find. I really feel for anybody out there trying to get on the housing ladder now.  Check out some useful articles here on remortgaging or getting a mortgage for the first time.

Are you remortgaging or getting a mortgage for the first time? What has your experience been? Are you despairing of finding a decent deal or have you struck lucky? Or do you think renting is the only sensible option right now?

Have a great weekend xxx Piper

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2 Responses to Mortgage fee misery

  1. Michael says:

    You have picked up on a point I am constantly having to make my clients aware of (I\’m a whole-of-market mortgage adviser).  Remortgaging onto a better rate every couple of years is great, if you consider only the headline rate of interest, but can soon add to your loan size if you\’re adding the fees in to the loan.  However, your point about needing a short-term deal to avoid expensive redemption fees due to your intended house move is not so valid – if you opt for a longer-term portable deal you can take your mortgage with you to your new property and avoid the early repayment charges.

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