Fees included or paid up front, what's the difference

Thrugelmir

Ritchie74 wrote: »

You'r right, in your example there would be no difference to total costs. However this is not the scenario under which people advise not to add fee's to their loan.
This advice is for the circumstance of a given loan amount.

Eg customer has requested a mortgage of £50k. Should they add the fee to the loan or pay up front. The answer is pay up front thus you don't incur interest on the fee.

By changing the loan amount as in your example, you are not comparing like-for-like.

Are people advised to add fees to their mortgages? Or given the option like the thought of having money to spend on something else. As paying a fee extra £'s each month is neither here ot there.

People borrow as much as they can normally. Rather than taking a more measured long term approach to climbing the property ladder. Borrowing less for shorter periods (well under 25 years). Means that more capital is repaid earlier.

We have a fixation with 25 year mortgages in this country. Only the lenders benefit by maximising the amount of interest they can charge. Knowing that most people are likely to move within a number of years and will end up borrowing more for another 25 year term.