With intense competition between lenders, mortgage product fees have been lowered across the board, this has coincided with a 34% rise in fee-free mortgage deals. Now, every four out ten mortgage products don’t charge any arrangement fees.
The research from financial information group Moneyfacts showed that the average product fee has fallen from a high of £1,075 in September 2021 to the current £1,057.
They also showed that the average gap between the interest charged on fee-paying mortgages and fee-free mortgages has narrowed to a small 0.03%. With fee-payers being charged an average rate of 3.68% and those who don’t being charged 3.71%.
Should I pay the fee?
Whether it is worth paying a fee or not is down to your own personal circumstances.
Mortgage experts advise that the most important consideration is to take into account the total cost of the deal, including other fees and incentives.
As a rule of thumb, if you have a larger mortgage, you will be better off paying a fee in order to secure a lower interest rate. However, you have to ensure that the savings from the lower rate will surpass the fees involved in securing the mortgage.
In line with this, those with smaller mortgages will generally be better off going for a fee-free deal.
However, with the differences in rates currently being so small, the advantages of paying are also likely to be smaller.
What about mortgage products offering extras?
A lot of mortgages now also offer free legal fees, valuations, and cashback.
Here, mortgage experts again recommend looking closely at the total value of everything included in the offered product and how much it will cost you in total.
The best mortgage is usually the one that works out the cheapest over the product’s entire course. So, there can be a lot of value in getting expert advice as they will be able to identify the true cost of each mortgage product and select one that will fit your personal circumstances the best.
At The Agent we partner with Your Mortgage Hub to provide mortgages and protection. Their team have access to the whole market for mortgages and their service is always centred around putting you first, ensuring that you find the product that suits you best.