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Those seeking a first time buyer mortgage are being turned away in record numbers. The problem is being blamed on the fact that in order to get a first time buyer mortgage right now you have to have a large down payment and be willing to pay higher interest rates. For many first time buyer mortgage seekers, this is not possible.

Ann Robinson, Director of Consumer Policy at uSwitch.com, comments: “This is a real catch-22 for consumers who are struggling to find the funds to pay mortgage set-up costs. In fact, by allowing consumers to add fees onto the mortgage, it could be argued that providers are doing them a good turn. This is particularly true for first time buyers where it could mean the difference between getting on the property ladder or not.

“However, adding fees to a mortgage means that you will be spreading the amount over many years and paying interest for the pleasure of doing so - this is an extremely expensive option and should always be seen as a last resort. If you can in any way manage to pay the fee upfront this will always be your best option. Otherwise buyers should make sure that they make regular overpayments to minimise the impact of high interest costs - as they could end up doubling the original cost of an arrangement fee.”

Related reading: First Time Buyer Mortgage