Arrangement fees can double when added to mortgage

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Arrangement fees can double when added to mortgage

UK homeowners have been hit with £8.7 billion in additional fees on their mortgages, with 900,000 consumers having fees added to their mortgage without them even knowing they have given consent, according to uSwith.com.

The price comparison and switching service found that 38 per cent of people have chosen to add their arrangement fees onto their mortgage rather than paying upfront, despite the fact that this could double the cost. Cash-strapped 25 to 34-year-olds were the most likely (70 per cent) to take this route.

It worked out that adding the average mortgage arrangement fee of £987 onto a 25-year mortgage ends up costing the borrower £2,094 - 112 per cent more than the original fee.

Ann Robinson, director of consumer policy at uSwitch.com, acknowledged that attaching the arrangement fee to the mortgage may be the only way the some first-time buyers will be able to get onto the property ladder.

However, she warned: "This is an extremely expensive option and should always be seen as a last resort."

Recent research from Abbey Mortgages found that New 1.1 million first-time buyers have opted to delay buying a home for at least the next 12 months.
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