Adding arrangements fee to mortgage should be 'last resort'

Homeowners should always try to pay their mortgage set-up costs upfront rather than opting to add an arrangement fee, it has been advised.

According to Ann Robinson, director of consumer policy at online comparison and switching service uSwitch.com, adding an arrangement fee onto a mortgage should be viewed as a "last resort", as it represents an "extremely expensive option".

Recent research from the website revealed that 38 per cent of people have opted to add an arrangement fee to their mortgage rather than pay upfront, with many consumers having been advised to do so.

Commenting on the trend, Ms Robinson said: "This is an extremely expensive option and should always be seen as a last resort."

She maintained that it would always be the "best option" for homeowners to pay the fee upfront if they could manage it.

Ms Robinson added: "Otherwise buyers should make sure that they make regular overpayments to minimise the impact of high interest costs - as they could end up doubling the original cost of an arrangement fee."

There has been a 60 per cent reduction in the number of mortgages available in comparison to this time last year, according to a study undertaken by Moneyfacts.co.uk.

Mortgages News posted on 17/04/2008 13:12:11