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Fixed Rate Mortgage Arrangement Fees
Merson_Tuffers
Posts: 23 Forumite
Hi Folks,
I have just sorted out my next fixed rate mortgage but have to confess to being rather miffed at what I feel is an exhorbitant arrangement fee.
Can someone please tell me exactly what 'arrangements' the bank makes to justify this large charge. I have no problem with the charge per se - nothing for nothing in this world, I know - it just seems to be very high.
I currently have a fixed rate with this bank, so they have all my details. I have gone for a 10 yr plan but even so, £899 to me is still a lot of money!!
Cheers for reading.
Merson Tuffers
I have just sorted out my next fixed rate mortgage but have to confess to being rather miffed at what I feel is an exhorbitant arrangement fee.
Can someone please tell me exactly what 'arrangements' the bank makes to justify this large charge. I have no problem with the charge per se - nothing for nothing in this world, I know - it just seems to be very high.
I currently have a fixed rate with this bank, so they have all my details. I have gone for a 10 yr plan but even so, £899 to me is still a lot of money!!
Cheers for reading.
Merson Tuffers
0
Comments
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YOu could have opted for a deal with lower fees if you wanted
Or would you like a deal with a low rate and a low fee - utopia! :rolleyes:I am a Mortgage AdviserYou should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
YOu could have opted for a deal with lower fees if you wanted
Or would you like a deal with a low rate and a low fee - utopia! :rolleyes:
I could have but long-term fixed rate mortgages are a bit thin on the ground. And the rate ain't that cheap, let me assure you, but I was prepared to pay a higher rate for 10 years peace of mind.
I just think that £899 is a very large sum of money for pushing a few buttons on the computer.0 -
Merson_Tuffers wrote: »
I could have but long-term fixed rate mortgages are a bit thin on the ground. And the rate ain't that cheap, let me assure you, but I was prepared to pay a higher rate for 10 years peace of mind.
I just think that £899 is a very large sum of money for pushing a few buttons on the computer.
Exactly, but I bet there was a higher rate with a lower fee
YOu have to weigh up which is going to be most cost effective for you - so over 10 years I'm guessing that the lower rate will still work out cheaper for you
The £899 fee is not just pushing buttons, it also involves the cost of obtaining the funding from the money markets plus everything else involved with the mortgageI am a Mortgage AdviserYou should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
I have just sorted out my next fixed rate mortgage but have to confess to being rather miffed at what I feel is an exhorbitant arrangement fee.
Why did you buy a mortgage with a high fee then? You could have got a higher rate and a lower fee instead.Can someone please tell me exactly what 'arrangements' the bank makes to justify this large charge. I have no problem with the charge per se - nothing for nothing in this world, I know - it just seems to be very high.
Where do you think the money comes from to fund this fixed rate?I just think that £899 is a very large sum of money for pushing a few buttons on the computer.
Do you really believe that pressing a few buttons on a computer suddenly makes the money appear?
I cant type more now as I need to get to the post box but will later. The mechanics of funding fixed rate mortgages and the costs involved as well as where the profit to the lender is are all important here.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 -
Right, quick and simplified brief on how they fund fixed rates a lot of the time.
Lender wants to issue a fixed rate. However, the fix is typically lower than the variable rate so they have to find a way to be able to afford to offer it so cheap. So, they go to investors and take their money and pay them a fixed rate which in turn they lend to you at a fixed rate. There are penalties on both sides if one wishes to pull out and in some cases the investors cannot pull out.
The lender then has to factor in its profit margin. The two main ways of doing this are take no profit on the interest paid but have a higher fee to cover that or to have a lower fee put put a percentage margin on the fixed rate. Smaller mortgages are better with lower fees, higher rate and larger mortages are better with higher fees lower rate.
So, you can see that the fees are fair, reasonable and legal.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 -
whats the rate on the 10 year fix? i sorted mine out last month with first direct at 5.15%, however its gone up to 5.49% now.
£299 booking fee
£299 arrangement fee
£99 valuation for re-mortgaging0 -
Nationwide does the 10 yr fix with a £499 fee.
Hope you made your calculations correctly. 10 years is a long time. There are also very good 5 year deals about with reasonable fees.0
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