Is there a catch if a lender offers to drop the charges?

Out in the big, bad world of housing, sympathies are usually reserved for first-time buyers struggling to grab the bottom rung of the housing ladder.

But life is tough, too, for those who want to remortgage or move home.

The average home-loan arrangement fee has rocketed from [pound]381 in 2004 to [pound]713 now, according to financial analyst Money-facts, as lenders try to compensate for having to reduce interest rates to keep up with the competition.

What's more, the Woolwich 2007 Cost of Moving survey, published last week, reveals that it now costs an average of [pound]4,666 to sell a home in legal and estate agency costs. Meanwhile, to buy a property costs [pound]10,745, of which [pound]9,750 is accounted for by stamp duty. This brings the average cost of moving to a colossal [pound]15,411.

But given the raft of fee-free mortgage deals that have emerged recently, it would seem lenders are starting to take notice of the consumer backlash against these rising costs.

Last month, Abbey unveiled a range of mortgages exclusively for home movers, who, it says, "face a significant outlay when taking on a new mortgage and coping with stamp duty".

As well as offering free booking, valuation and arrangement services, the deals will cover the personal legal costs incurred by customers both in buying and selling, as well as other disbursements such as searches and Land Registry fees, providing the value of the new property does not exceed [pound]500,000.

But the home mover will still have to fork out for stamp duty - and there is a catch. The deals comprise a two- and five-year fix and a two-year tracker, with two versions of each mortgage - and the cheaper version comes with extended tie-ins for 18 months beyond the deal period.

For example, the two-year fix is payable at 5.34 per cent but locks you in for a year and a half after the end of the deal. During this time you will pay the lender's standard variable rate (SVR), which currently stands at 7.34 per cent.

If you want to avoid this "overhang", you can - but you will pay a higher price for the fix: 6.37 per cent.

Leave the mortgage within the first two years and you'll be charged 0.66 per cent of the amount redeemed - plus a flat fee of [pound]1,200. But leave after two years and it will cost just the 0.66 per cent, which could well be worth paying in return for the free legal services, says Ray Boulger of broker John Charcol. "This deal shouldn't automatically be discounted just because it has extended early repayment charges. It provides excellent value for loans of up to [pound]300,000, and maybe more depending on your legal costs."

It's worth noting that "fee free" can be misleading. Although City regulator the Financial Services Authority requires the marketing of mortgages to be "clear, fair and not misleading", the phrase can still mean different things.

For example, Abbey's deal will charge an exit fee of [pound]295 on redemption. HSBC's version of "fee free" does not include this charge. "The only fee payable on any of our mortgages at any time is a booking fee of [pound]499," says HSBC spokesman James Thorpe.

During April and up until tomorrow evening, HSBC is waiving this booking fee, meaning no mortgage-related fees at all.

Meanwhile, Yorkshire building society is running a TV campaign promoting itself as the lender that likes to say "no" to upfront mortgage costs. It now offers a range of mortgages that don't levy any fees at all at the outset. Where appropriate, however, it will still impose a higher lending charge (an insurance policy to protect the lender) on purchasers, as well as an exit fee. The Yorkshire fee- free range includes five-and 10-year fixes, both priced at 5.89 per cent.

Another phrase to treat cautiously, for borrowers who are remortgaging, is "free legals". This refers to work done by the lender's in-house lawyers to make its own checks on a home, such as verifying title deeds. "You could argue this should be paid by the lender anyway," says Rob Clifford of broker Mortgageforce.

Also popular in wooing buyers is the term "free valuation", which usually refers to a standard assessment of a typical property.

Bear in mind that a valuation is not a survey; it serves only for the lender to check the property is adequate security for its loan. Sharon Rawcliffe, 42, is due to move into a new home in the next few weeks with husband Philip, also 42, and seven-year-old son Spencer.

The family, who come from Blackpool, have been in their current home for only 14 months, in which time they have carried out a complete renovation. The property has just been sold for [pound]195,000, against the

'We won't move again: the tie-in is worth it'

[pound]144,000 they paid for it.

"We have renovated previous houses, too, and were hoping to eventually pay off the mortgage this way [by making big profits on the sale of these properties]," says Mrs Rawcliffe. "We paid [pound]250,000 for our new house [a detached three-bed home overlooking the sea], which also needs renovating. A similar property in the road sells for [pound]350,000."