High fee mortgages ‘could increase home loan costs’

Borrowers are being warned that choosing a low-rate high-fee mortgage may not actually result in cheaper monthly loan repayments.

According to Julia Harris, mortgage analyst from price comparison website Moneyfacts, those opting for such products are likely to face increased pressure to on the costs of their home loans.

She said: "It is worrying that consumers may be duped into these deals, thinking they are getting the best possible rate, without realising the financial impact of such a large fee."

"Where these high fees become most costly is when they are added to the loan, effectively increasing the amount borrowed and pushing up the monthly payment."

Ms Harris added that flat-rate mortgages are likely to be "more competitive".

Research by moneysupermarket.com revealed mortgage application charges could take up to 17 months to pay off, thus adding to the amount of time taken by borrowers to pay off their mortgages.

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