Attractive headline rates of interest used to be the only pull for borrowers, falsely believing that the lower the rate, the better the deal was. In truth the fees associated with taking out your mortgage, as well as the exit fees when it comes to remortgaging to another deal can be the ones that hit the hardest, with lenders looking to claw back the money they lose out on in any way possible.
As we move away from a totally rate driven mortgage market, much focus has been placed on total cost, inclusive of rising arrangement and exit fees, commented Julia Harris, mortgage analyst at Moneyfacts.co.uk.
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We also talk of higher lending charges, procuration fees and redemption charges, and even go as far as complaining about the money transfer fee. But one fee, which perhaps we view as a service charge, has slipped through the net the valuation fee.
As many first-time buyers struggle to step on the housing ladder, lenders are using fee free deals to entice borrowers who are unable to afford the start-up costs. But of course you will be paying for this by way of a higher rate. Other lenders will offer free valuations to remortgage customers, simply because there is little work involved and normally a surveyor is not required.
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When lenders talk of free valuations they are referring to a Basic Valuation a brief report commissioned by the lender comparing your property with similar homes and assessing the general order of the property. It provides a value for the property that ensures the lender is not advancing you more than the property is worth. So although you are footing the bill, the lender receives the benefit.
Further to the basic survey, you can commission either a Homebuyer or Full Structural Survey. The exact type will depend on the level of information you require and the age and build of the property. But dont assume all valuations will involve the same depth of information, particularly on the standard valuations. Some lenders will perform drive-bys or use AVMs, but some do insist on an internal and external viewing.
If you do find yourself faced with paying a valuation fee, the cost varies considerably between lenders, so its worth taking note of the table below;
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Harris continued: With such large variations in the size of fees, the valuation must be yet another part of the mortgage package to compare when shopping for the best deal. Its vital that you look at the true cost of the deal, as comparing just the rate will leave you in a very vulnerable position and some less obvious expenses could catch you out.
With four digit arrangement fees now commonplace, stamp duty at crippling levels and valuation fees running into hundreds of pounds, not to mention the legal costs involved, its no wonder borrowers are struggling to find the upfront costs needed to move home or to step onto the property ladder.
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