A third of homeowners who remortgage only look at the interest rate on offer and ignore the overall cost of the loan, a survey has revealed.

Magazine Which? Money advised that people should consider the full cost of the deal and not just focus on the headline rate.

It said people could be caught out by high mortgage arrangement fees, the average of which is now £1,104.

The survey found that 26% of homeowners said they chose their current mortgage because of the interest rate that was offered. Only 20% focused on the overall cost of the deal.

Nearly a third of the 2,104 people surveyed admitted to never switching mortgage lenders, while 30% said they were on their lenders' standard variable rate, which is traditionally an uncompetitive option that people are automatically put on when a fixed rate or tracker deal comes to an end.

Overall, satisfaction with mortgage lenders was high, with eight out of 10 people saying they were very or fairly satisfied with their provider, although just 20% thought their lender kept them informed about better deals that may be available to them.

Martyn Hocking, editor of Which? Money, said: "The cost of mortgages has soared in the last couple of years, but a lot of the focus has been on what's happening with interest rates when in fact it's the total cost of the deal that's important.

"Arrangement fees are now more than £1,000 on average, and sometimes much higher, which means that an eye-catching interest rate can be misleading.

"Whatever you do, don't take the lazy option of simply taking out a deal with your bank or staying on your lender's standard variable rate. If you shop around and do your homework, you could cut your mortgage costs by hundreds of pounds."

Copyright © PA Business 2008