When you are looking for a mortgage it is always better to choose the lowest possible rate of interest, right? According to Moneyfacts, the lowest rate may not always represent the best deal for you.
The provider of financial data states that it may be preferable to choose a deal with a slightly higher rate of interest but no arrangement fee, than a low interest rate deal. According to the organisation, lenders like to charge an arrangement fee so that they can lower the rate of interest, making it look like an attractive deal. However, you may save more in a year by signing up for a higher rate of interest than one with a fee. Although it costs lenders around the same amount to arrange a mortgage, some charge more than others, with fees varying from nil to £2,794.
Charlotte Nelson from Moneyfacts says:
“Low-rate deals look great on paper but are often accompanied by high fees. With fees on mortgages ranging from nothing up to £2,794, and with the average sitting at £939, it is easy to see why opting for the wrong deal can be a costly mistake.”
Before signing up for a new mortgage product, it is advisable to make an appointment with an adviser who is professionally qualified with a CeMAP qualification. This training course equips mortgage advisers with all the relevant knowledge they require to advise borrowers about the most suitable product for their particular situation.