Consumers urged to watch out for mortgage application fees

Financial advice website MoneyExpert has advised mortgage borrowers to be aware of application charges on packages they take up, reporting that these fees have increased by 22 per cent in the last year.

According to the organisation, the average application fee for a discount mortgage is currently £407, while for a fixed-rate offer it is £494.

These charges have seen respective rises of 15 and 22 per cent from a year ago.

MoneyExpert claims that the reason behind these increasing fees is that mortgage lenders are attempting to recoup some profits that are being lost to an interest rate which has remained at 4.5 per cent for 11 months.

Sean Gardner, MoneyExpert’s chief executive, said: “Borrowers need to budget for application fees when they take out a mortgage and particularly those who are remortgaging.

“What you believe is a cheap deal saving you, for instance, £100 a month won’t look quite so good when you add on application fees.”

While the typical fees of £407 and £494 given by MoneyExpert are averages, it points out that some discount loans can charge as much as £749, while some fixed-rate offers can charge up to £1,099.