bright light

In order to get a fixed rate mortgage right now, consumers are finding that they will have to pay significant signing fees. The rates for fixed rate mortgages have also gone up, making them now one of the most expensive loans to get. For those that need to get a fixed rate mortgage, this news is less than welcome.

Sean Gardner, with MoneyExpert, stated, “It’s fairly common to see fees around the £1,000 mark or even higher. This all adds to the costs of remortgaging or moving home and will make the woes of the housing market worse as it clogs up the whole sector.”

David Hollingworth of London and Country stated, “What Abbey has done is very much in tune with the general credit crunch and the threat posed by negative equity. They know that when borrowers capitalise fees, in effect it adds to the loan-to-value [how much of the property’s purchase price is not accounted for by the deposit). And if this takes them over 95 per cent, it means that with the current falls in property prices, the mortgage holder is soon stuck in negative equity. Abbey won’t be alone in doing this.”

Related reading: Home Mortgage