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Arrangement Fee...Justify!!
CSAYR
Posts: 3 Newbie
My two year mortagage deal with the DUNFERMLINE BS is nearing an end and they've posted me a couple of re-mortgage offers. I've been with the Dunfermline for a few years now and I've found them helpful, with the local High Street branch quite reassuring.
My only gripe is that on the fairly attractive FIXED RATE deals they've offered, they're still looking for an ARRANGEMENT FEE. Does anyone feel this fee is unjustified and do I have an argument for them to waive this?
How can they justify charging £199, or with one deal £699 when I'm not even changing lender? Are they just charging this through greed because they know I'll end up paying similar fees if I jump ship to another lender? I know I'll save money over the term of the mortgage but as a matter of principle I feel it's unfair and unjustified.
Thoughts anyone...?
My only gripe is that on the fairly attractive FIXED RATE deals they've offered, they're still looking for an ARRANGEMENT FEE. Does anyone feel this fee is unjustified and do I have an argument for them to waive this?
How can they justify charging £199, or with one deal £699 when I'm not even changing lender? Are they just charging this through greed because they know I'll end up paying similar fees if I jump ship to another lender? I know I'll save money over the term of the mortgage but as a matter of principle I feel it's unfair and unjustified.
Thoughts anyone...?
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Comments
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There is no argument against it and it is perfectly justified.Does anyone feel this fee is unjustified and do I have an argument for them to waive this?How can they justify charging £199, or with one deal £699 when I'm not even changing lender?
If you dont pay then who is? Who is going to pay the costs in negotiating those terms on the money markets and arrangeing investors willing to finance that fixed rate? For some fixed rates, there is not a penny profit on the interest rate with the only profit in the arrangement fee.
Do you go to Currys ever few years and get them to supply you with a new TV because you bought from them before? Then why should a lender sell you a new retail product every few years without charging you for it?
as a matter of principle I feel it's unfair and unjustified.
Only because you want something for nothing.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
If you want the deal, you pay the fee.
Look around at what else is available and decide whether it is cheaper to stay or cheaper to find a new lender. Some lenders offer free legals and valuations so you may find its cheaper to move.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
according to their website you can get the fixes with no arrangement fee and pay the higher interest rate. Or their SVR mortgage has no fees......0
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I am getting bored of this subject, the public want every thing for nothing. Yes lenders make money thats why they are there. They are propably not making as much as you think on lending at the mo, hence fees are up across the board! I think your fee's are low, we are seeing fees at well over £1000 on the lowest fixed rates. Also if you had a mortgage or 1mil you would be laughing!
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Thanks guys, I'm not all that clued up on the ins and outs of these deals but going by what dunstonh says, there's more to it than meets the eye. If there is a lot of hard work going on behind the scenes, fair enough. To the average man in the street though (ie ME!) it feels as if I'm paying for some wee lassie in their office to rattle a few buttons on her keyboard. Especially when I'm not changing lender.0
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In really simple terms and removing some of the mechanics....
lender wants to issue a fixed rate but that means going to investors who are willing to put x million of pounds available where they get paid x interest rate as a return. This money is then packaged as an investment to them (hence the tie in penalties you get if you pull out early because those investors still need paying or they will have agreed a similar penalty) and then the lender will use the investors money to lend on a fixed rate to you.
There are trends at the moment to have lower fixed rates with higher fees (where profit is transferred to the fee) and higher fixed rates with lower fees (where the profit is with the interest rate). Depending on your size of mortgage, one will appear better than the other.
The days of lenders using savers money are largely gone (it still happens with many lenders but usually only on variable rate mortgages). So, even though you have a mortgage, they are having to arrange block finance to be able to offer that rate.
Once you realise that there is a lot of work going on behind the scenes and realise where the profit is (rate or charge) then it makes a lot more sense. And remember, everyone is in it for the profit; the lender and the investors that finance the deal as well as you looking for something better than variable rate.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Cheers dunstonh, that's certainly opened my eyes a wee bit. I'm not really borrowing all that much and I'll get my fee back in the saving within months, my only problem was with a matter of principle.
I was hoping some of the many experts on here could help explain things, many thanks.0 -
CSAYR sorry if I came across blunt. You are correct about lender though if they explained why the fees were there in the first place you would not really mind.
Although there are some fees worked out on a % basis and if you are borrowing a lot they can be a bit silly!0 -
I tend to agree with dunstonh (as always). However, what seems unfair is that a borrower of a small sum, say £30K pays the same fee as one borrowing £500K.
Now, if the bank/building society have arranged a £500million fixed rate fund they will make more money by having lots of smaller borrowers (and I don't mean pygmies/dwarfs etc.). Maybe the arrangement fee should be proportional to the amount borrowed.
GGThere are 10 types of people in this world. Those who understand binary and those that don't.0 -
Georgeous George, some of the work has fixed cost so that shouldn't really vary, though an option to pay for it with a higher interest rate that depends on the loan size would be one way to approach it.
Other costs depend on the loan size. If you're "buying points" - reductions in interest rate to take it below normal - then the cost to the lender would naturally depend on the value of the loan.
In other cases at the moment the short term interest rates are high but it's hoped that they will drop. A higher initial fee subsidises the short term higher interest rate a lender may have to pay.0
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