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All those who take out a mortgage know that establishment fees usually have to be paid. However, these days the life of a loan -which used to be around 30 years - has now been reduced to around the 3-5 mark, due to rising interest rates. Homeowners try to avail themselves of lower rates or fixed interest when the repayment costs escalate, so they tend to switch loans.

Lenders are generally not happy about this loan switching as they miss out on all that interest, so to mitigate their losses they often write a deferred establishment fee into the loan policy. They can then offer the loan at a very low fee, which attracts people to the product. The trouble is, when interest rates soar and the borrower thinks he can switch to a different loan to save money, he is then hit with the deferred establishment fee before he can break the mortgage.

In many cases changing the loan to another one then becomes unproductive because these fees can be up to $2,500 or a percentage of the remaining loan in some cases. So any savings are offset by the added cost of switching over. While you may finally recoup that cost by switching to a loan with lower or fixed interest rates if the loan is relatively new and you've 20 odd years still to go on it, if you switch several times you certainly are not likely to come out in front. The best way is to make sure you get the best deal to start with - and keep it.

To avoid having to switch loans too many times, it's worth researching online loans even before you borrow to ensure that you get the best loan interest rate for as long as possible.