Borrowers are in danger of being lured in by attractive headline mortgage rates before being stung by heavy additional costs, an online mortgage broker has warned.
Analysis of the ‘Big Six’ mortgage lenders by Trussle has revealed customers choosing the lowest rate two-year fixed deal will pay on average £390 more than for a product with a higher rate but lower fees.
This is because mortgage deals are often presented by lenders or sorted by price comparison sites in a way that makes borrowers prioritise eye-catching rates.
But these potential savings could be wiped out by upfront costs, something fewer than half (44%) of 2,000 mortgage customers surveyed by Trussle considered when choosing deals.
Barclays and Santander have been highlighted by Trussle as being the most expensive when it comes to the ‘cost gap’.
Borrowers choosing a mortgage with Barclays could see costs rise to £649 by opting for the bank’s headline deal over an alternative higher rate, lower fee product. With Santander customers could be stung for £577, said Trussle.
These figures are based on a customer taking out a mortgage of £135,574 with a 60% LTV on a house worth £225,956.
Ishaan Malhi, CEO and founder of Trussle, said: “The Big Six lend to more than two thirds of UK mortgage borrowers and have a huge amount of influence on people’s dreams of owning a home.
“They should be the ones leading the charge for transparent mortgage pricing, instead of the unfair promotion of low rate products that come with high fees.”
He added: “There’s no two ways about it, the market is confusing people. It’s time lenders, brokers and the comparison sites club together behind true cost for the sake of homeowners across the country.”
The Big Six lenders are Lloyds Bank, Nationwide Building Society, RBS, Santander, Barclays and HSBC.
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