Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“Borrowers who locked into a cheap fixed rate in 2020 and are looking to refinance will find mortgage fees have been on the rise. Outside of headline-grabbing low rates, borrowers need to check the overall cost of any mortgage, which includes any fees or cost-saving incentives. The best deal depends on someone’s circumstances and how much they need to borrow; someone with a larger debt would typically chase a lower rate, whereas those looking to avoid upfront costs would consider fee-free deals and incentives. The lowest fixed mortgages on the market typically charge upfront fees of around £1,000, or even up to £2,000, so a mortgage with a slightly higher initial fixed rate and lower product fee could be a better choice.

“Deeper analysis of the availability of mortgage incentives shows a proportional decline in the quantity of deals that do not charge a product fee, down to 36% from 41% five years ago, but slightly higher from 35% in March 2024. However, one incentive in continuous decline has been in the proportion of deals that pay cashback, as there are now less than a third of deals with this sweetener attached, across all fixed mortgages. Borrowers coming off a fixed deal may have to face higher mortgage rates this year, but they can still find an abundance of deals with cost-saving incentives, and it’s still cheaper to refinance onto a fixed rate than reverting onto a Standard Variable Rate (SVR).

“More often than not, borrowers can find a deal with a free or refunded valuation incentive, and just under half of all fixed deals will cover legal fees. Those looking to remortgage will likely want to keep costs down and refinance without too much effort, so mortgage bundles are a great choice to avoid the worries of covering upfront fees. First-time buyers may also have exhausted all their disposable cash on a deposit, removal and furnishing costs, so a cashback deal with a bundle of incentives could be ideal. Lenders could also add upfront fees to the mortgage advance, so it’s wise for borrowers to seek advice to navigate all the options available to them before they commit.”