Ban home loan fees, whatever they're called
Lenders admit they charge excessive fees so they can lower the headline rate
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Anyone who’s taken out a mortgage lately will have been charged a fee.
Fair enough, you might think, after all lenders have plenty of administrative paperwork to sort out. Why shouldn’t they charge for that?
But the charge isn’t to cover a lender’s costs, despite some of our leading banks charging what they call an administration fee. In truth it’s a shabby way to trick borrowers into paying more for their home loan than they need to.
How do I know this? Lenders have freely admitted it to me. They charge excessive fees so that they can lower the headline interest rate they offer. That helps push their deals up the best buy tables which in turn allows them to attract more business.
In short, it’s just another way to market their loans. But the net effect is confusion among borrowers. They rightly ask how it’s possible that a loan with one of the lowest interest rates can be one of the most expensive deals?
Even when borrowers understand that they have to look beyond the headline rates to find the true cost of a mortgage lies the fact that lenders then confuse them even further by dressing up these extra charges with ever-more confusing names.
Which? reckons there are more than 40 different names for these lender charges. As well as the fairly standard “administration fees”, lenders are charging “application fees”, “assessment fees”, “arrangement fees”, “booking fees”, “product fees”, “reservation fees” “completion fees” and “mortgage questionnaire fees”.
There’s even the ridiculously prosaic “lenders’ fees”.
They’re all designed to hide the true cost of a mortgage from us and, for that reason, should be banned. Borrowers should be quoted the true cost of a mortgage upfront so they can compare different deals. It’s time for the authorities to put a stop to these sneaky and unnecessary charges.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments