Homeowners advised to consider overall mortgage costs – HSBC and Yorkshire Building Society
A recent report has suggested that homeowners should consider the total cost of a mortgage when looking for a deal rather than just the interest rate.
It has been said that mortgages with low interest rates can work out to be more costly after taking into consideration other fees that are related to the deal. Usually it is better to go for a mortgage deal with a high rate with minimum related fees.
The best fixed rate mortgage at present is being offered by HSBC at 2.89% with a deposit of 40% of the property value. But the arrangement fees add up to £1499 and other costs such as legal and valuation fees are around £600.
On the other hand, Yorkshire Building Society offers a fixed rate mortgage for 3.59% which is 0.7 per cent more than HSBC’s offer but arrangement fees accumulate to only £245 and they also offer £250 cash back.
Michelle Slade from Moneyfacts.co.uk commented: "It's vital that people compare the true cost of a mortgage. A lot depends on your personal circumstances, a low rate and a high fee could work out better if you have a high mortgage.
She commented further: "People often don't look at the fee and just look at the rate, but they should compare costs on a like-for-like basis, including any fees."
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