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Mortgage fees take 17 months to pay off

Homebuyers are being warned to "do their homework" when it comes to choosing a mortgage provider to avoid having to pay back large fees on top of their real mortgage debt.The research by moneysupermarket found that mortgage application fees for some mortgage providers took up to 17 months to pay back.It found that borrowers taking out an average £150,000 on a two year fixed-rate Northern Rock mortgage, with an application fee of £5,250, spent almost the whole deal period paying off the fee - and only seven months clearing the real mortgage debt. By contrast, a homebuyer with an Abbey fixed rate deal at 5.14 per cent had a much lower application fee of £999 which could theoretically be paid off in just four months. Although someone choosing the Northern Rock product would pay £49 a month less than with Abbey, they would therefore only reduce their total mortgage debt by £1,455 compared to £4,717. Despite the higher monthly payments Abbey borrowers would be over £2,000 better off over the two years.Louise Cuming, head of mortgages at, advised homebuyers to do some "careful homework" to factor in the headline rate, fees, and the overall true-cost of the mortgage. "It can be worth it to pay a little more each month if that means you are paying off the actual mortgage and not just the fee," she said."However, I would urge anyone who can afford to do so to pay the application fee up front, or as quickly as possible within the product terms by making overpayments," she added."Borrowers need to remember that not only will the fee take time to pay off, but it will also be subject to interest. Therefore, if someone has adequate savings, they would be well advised to pay this fee in the first instance."

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