House Doctor: 'My five-year fix is over. Do I have to pay upfront for a new deal?'

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Question: I'm close to the end of a five-year fix with Nationwide and am staggered at the mortgage fee for another fix – more than £1,100. When I fixed in 2006, it was only about £350. Is there any way around this or an alternative to paying upfront – it's a huge sum to afford in these times.

Dominic Max, Herts

Answer: Your current home loan stems from the pre-credit crunch era where, before late 2007, cheap, easy credit meant borrowers could access a mortgage without much in the way of financial barriers.

Today, lenders shaken by the financial crisis continue to impose rigorously tight credit controls to shore up their bottom line.

The average mortgage arrangement fee has mushroomed to £1,044, says research by price comparison site uSwitch.com – up from £520 in late 2006. However, some flat fees can be even pricier, warns David Hollingworth from London and Country Mortgages, and will hit your finances even harder if charged as a percentage of your loan.

"Yorkshire Building Society currently charges a £1,995 flat fee on some of its cheapest rates – eg. 2.99 per cent for its two-year fix – while the Mortgage Works offers a two-year fix at 2.75 per cent with a 2.5 per cent fee," he says.

Take out a £200,000 home loan with the latter, and you'll be presented with a £5,000 fee bill just to access the deal. You do, however, have alternatives to paying the fee upfront depending on your circumstances but each comes with its own caveats.

Many lenders will let you add the fee to the mortgage, says Melanie Bien at broker Private Finance.

"However, while this is handy if you don't have the cash available, it will cost you significantly more in the long run because you will pay interest on it over the term of the mortgage," she says.

For example, a £1,000 fee added to a mortgage but paid back over 20 years at an average rate of five per cent would cost £1,581.60 in total.

The other alternative, if you have a good credit score, says Michael Ossei of uSwitch, is to pay for the fee using a zero per cent credit card for purchases.

As long as you can repay the cost over the period of the zero per cent offer then you can spread the cost more manageably.

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