Mortgage fee minefield creating a trap for home buyers
The latest report released by Which? has shown stiff competition within the mortgage lending market is forcing borrowers to pay increasingly costly and confusing fees. Consumers are now said to be facing over 40 different charges – some of which could be avoided.
This raises the question, could the same be said about conveyancing? Are you able to be fully informative about pricing from the start, or are there always unexpected hurdles along the way?
Property buyers are facing daunting times, as multiple charges are continuing to be applied to property buying. With so many charges being labelled a variety of titles, this makes it difficult for borrowers to establish the overall costs of buying their next home.
There is currently no set system for the type and amount of fees that can be applied to mortgages. The report revealed such a wide variation in costs between lenders, which suggests the fees are not an accurate reflection of the true cost to the lender.
Brokers are being urged to be more transparent and help home buyers to choose the best deal for them. The Executive Editor of Which?, Richard Lloyd, has released a statement saying this issue is something the government and regulators need to focus on improving.
In the last 5 years alone, arrangement fees are said to have nearly doubled, from an average of £878 in 2009 to £1588 this year.
According to Which?, those borrowing £100,000 over two years could potentially save up to £1,500 if only they had taken into consideration the added fees. Consumers are mistakenly just choosing a mortgage deal simply based on whichever has the lowest interest rate.
The Treasury claims the Financial Conduct Authority (FCA) are protecting consumers, who are currently given the best possible opportunity to select the best deals.
A representative from the Treasury say competition between lenders is a current focus and they are working towards making selecting the right deal easier and clearer for consumers.
What is your expert opinion on this subject – should there be set pricing structures for lenders and conveyancers which allows consumers to make a more informed decision on the services they require? On the other hand, are some charges impossible to accurately estimate at the beginning, with unavoidable issues hiking up costs?