Mortgage holders face higher fees as rates decrease

Mortgage holders face higher fees as rates decrease

Mortgage holders are facing increased fees, with lenders raising their arrangement fees by up to 60%. Despite mortgage rates coming down, some leading fixed-rate deals are now more expensive than those available in July. Skipton Building Society charges £2,995 on its five-year deals, while other providers are also increasing their fees, offsetting the rate decrease. According to Which?, borrowers could have secured cheaper deals back in July.

The average fee for a product with a 40% deposit has risen by 61% since July. Fee-free deals are now rare on market-leading rates. Lenders have made more significant price cuts for those with higher deposits.

Source: The i


As commercial finance brokers, we’re seeing the increase in arrangement fees across the board from lenders. In particular, we’re frequently seeing the same lender offering 2 or 3 different mortgage deals whether that’s on commercial property or buy-to-lets. Often a lender will have a lower interest rate with a higher arrangement fee and visa versa, at the end of the fixed term, whether that’s 2, 3, or 5 years, there’s very little difference in the overall amount paid.

The key difference for many of our clients is affordability, whether you go for a lower interest rate and subsequently a lower monthly payment with a higher arrangement fee or a higher interest rate and higher monthly payment with a lower arrangement fee.

For an informal chat about raising finance for your commercial and buy-to-let properties, please get in touch.
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