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UK Consumers Pay Almost £3 Billion To Organize Mortgages

by Jim ONeil on April 17, 2011

in Mortgages

Fixed rate mortgage programs have flooded the market due to worry that the base rate will soon increase. According to independent price comparison and switching organization uSwitch.com, these deals are costing UK homebuyers a bundle. On average, consumers are required to pay £1,044 in mortgage setup fees.

If this amount is added to the mortgage, it can increase to £1,701.

Based on these figures and the fact that there are currently 11.4 million UK mortgage loans, the mortgage industry is making £2.6 billion solely from setup fees. The average fixed rate mortgage fee is £10 higher than the average mortgage arrangement fee and £37 higher than a tracker mortgage fee.

Adding this fee to the mortgage increases the amount by 70 percent.

With a current average deposit of £34,000, young homebuyers have difficulty finding money for these fees. Close to half of homebuyers age 18 to 34 are adding the fees to their mortgage. This compares to only 22 percent of homebuyers over the age of 55.

Those who choose to pay them sometimes use a credit card that offers zero percent interest on new purchases.

Michael Ossei of uSwitch.com reports that consumers face a catch-22 situation when adding setup fees to their mortgage loans. Though the process is convenient, the cost is high. These fees alone can

stop some homebuyers from getting on the ladder.

Adding them to the mortgage makes the cost snowball.

Mr. Ossei believes that taking advantage of a temporary zero-interest purchase deal on a credit card is wise, as long as the homebuyer can pay off the amount before the introductory period ends. Regardless of when or how the fees are paid, consumers should request figures that illustrate the impact on the amount of interest paid.

Comparing these and finding the best deal results in lower costs to homebuyers.

cale

Are you saying that you participated in a fraud in order to get what you wanted, and now you want someone else to pay for it?

space bhart

Couples keep cash separate when living together: When it comes to property, only 30 per cent of couples rented admit the money they have hidden away…that’s what I heard anyway

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