Mortgage fees

Stevieb0y · 21 August 2007 at 3:26PM

I am due to remortgage my house again to take advantage of a discounted rate and while investigating whats available I think it should be investigated how the organisations can charge such high fees.
Currently I am favouring the Alliance and Leicester and already have my current mortgage with them. The fees for a remortgage (includes a higher amount due to a planned extension) is £999 for a 5 year discounted.

How can they justify this fee? Surely this is just a way to offset the discounted rate.

Has this been looked into like the bank charges?

Many thanks

Steve

dmg24 · 21 August 2007 at 3:28PM

Stevieb0y,

Do a search, you will find this has been covered ENDLESS times.

KTF · 21 August 2007 at 3:39PM

If you dont like the fee then pick another product.

Stevieb0y · 21 August 2007 at 4:29PM

Really helpful answer KTF, thanks. Remind me to ask for your advice next time the obvious needs pointing out

The point of my post was that these fees seem to be increasing as a way to offset the discounted rate.

dunstonh · 21 August 2007 at 4:40PM

I think it should be investigated how the organisations can charge such high fees.

Do you think it should be investigated why starbucks charge so much for coffee costing 10p? or how some places can sell coke at 30p a can and others at £1 a can.

Or perhaps you should find out how mortgages work and the costs and risks involved before making a statement like that.

The point of my post was that these fees seem to be increasing as a way to offset the discounted rate.

Depends on the size of the mortgage. Discount rates typically favour larger mortgages.

Really helpful answer KTF, thanks. Remind me to ask for your advice next time the obvious needs pointing out

It is the right answer though. If you dont like the price of a retail product, then dont buy it. This is why you have choice.

KTF · 21 August 2007 at 4:42PM

No problem

To expand... yes a lot of the fixed rates dont make a lot of money for the banks hence the high fee. The lower the rate, the higher the fee to recover some of the costs.

As to the comment about how can they justified charging the fees thats like saying how can BMW charge so much for a 3 Series when a Mondeo costs no more to build. The answer is they do so because they can and if people dont like it they have plenty of other options.

Its well worth asking a broker to see if there are any other deals out there that suit your needs as many other lenders have a free remortgage service so you may be able to get a better deal elsewhere.

easy · 21 August 2007 at 4:55PM

We recently remortgaged with Britannia, and paid no fees at all.

They had 3 fixed rate products. In each case, a higher fee offered a lower rate. We worked out that on the slightly higher rate, 5 year fix with no fee, we paid no more over 5 years than if we paid a fee and took the slightly lower rate. And we didn't have to outlay a lot upfront.

So sit down and do the maths. You may find a fee is a waste of time.

ja9living · 22 August 2007 at 10:59PM

I agree its a rip off, especially if your mortgage is not very big and you are remortgaging with your existing lender and dont have any advice service from them if you know what you are doing. Trouble is there doesnt seem to be any interest in investigating these excessive fees as the answer is 'you can shop around' and compare prices. But all the providers fees have risen way over inflation over the past few years so really there is no choice. If you want a 'product' mortgage you have to factor in the cost of the fee over the length of the product to compare different providers and products, ie if a 5 year fix, divide the fee by 60 months and add to the monthly mortage repayments (this may be obvious to some but not to everyone). When I have done this in the past the top two have always been Britannia and Nationwide. Note with Britannia sometimes there are offers on fees for Unison members or people who have had accounts with them for a minimum length of time. Also try shopping around and then go back to your lender if it isnt the best deal and haggle, might help if you want the convenience of not changing lenders. If you can at all avoid it, dont add the fee to the loan as this costs a fortune in interest, obviously. Hope this helps, maybe one day someone will start a campaign on this topic.

RedTomato · 22 August 2007 at 11:54PM

Actually, I have recently read somewhere that these were being questioned as they are clearly not just "arrangement fees" as is claimed. Trouble is, I can't remember where I read it! It is the sort of thing I can imagine Martin taking up. If the banks want to charge a fee to offset their risk, then fine, but it shouldn't be hidden as an arrangement fee. Clearly these fees are very confusing to the consumer. Also, if you pay £1000 by adding it on to your mortgage, the bank earns extra interest from you for all those years.
Even if they are forced to change the name though, they'll probably keep charging the fees for now given the instability and uncertainty in the credit markets.

KTF · 23 August 2007 at 9:03AM

They are a 'reservation fee' rather than an arrangement fee. The banks have bought x amount at this low rate so if you want a slice of it you have to pay for it. They are not a reflection on the costs involved but a 'price' for that particular product.

I dont see how the fee is 'confusing' as its clear there is a cost involved up front for the product and like any other product you have a choice so if you dont like one then go for another.

Sometimes paying a high fee for a low rate is not always the best option which is why it pays to shop around.

AndrewSmith · 23 August 2007 at 9:13AM

Tell you what, let's all campaign for the abolision of arrangement / booking fees on incentive mortgage products.

The lenders will then simply turn round and stop offering them leaving us with no choice of products at all except a basic standard variable rate mortgage at a current average rate of 7.75%.

Smart thinking, nice one.

Mortgage fees

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