Saturday, 9 December 2006, 14:04 GMT

The so-called "arrangement fee" for taking out a mortgage can now easily be £1,000 or more and has to be paid when the loan is taken out.

Experts say one reason for this rise is the growing cost of administration since mortgages were regulated by the Financial Services Authority (FSA) in October 2004.

And charging a fee upfront also enables the lender to keep down the interest rate which is what a lot of people look at when they pick a lender.

But mortgage expert Ray Boulger of John Charcol told BBC Radio 4's Money Box that higher fees can work to the advantage of borrowers too.

"A lot of lenders are offering a choice of fee and rate so you have the option of paying a higher fee to get a lower rate," he said.

"It would be simpler if every lender offered one standard variable rate mortgage. But it wouldn't be good for customers. The greater choice the greater opportunity there is for customers," he added.

But he admitted that the growing complexity of working out the best deal was good news for mortgage advisers.

"There are all sorts of options in the market and if people don't get advice there is a strong possibility they will end up with the wrong deal," he said.

"Since mortgage regulation came in two years ago the statistics show a higher proportion of people do consult a broker."

And he blames regulation for that. "The Key Facts illustrations which the FSA requires contains a lot of information but it is complicated," he said.

And he says brokers can help in other ways.

Source: http://news.bbc.co.uk/1/hi/programmes/moneybox/6164821.stm