Second arrangement fee

declanmcc

Hi,

2 weeks ago I applied for a 5 year fixed rate (6.45%) with Nationwide using London and Country. This product had free basic legal work, free valuation and a £599 product fee.

In the meantime, Nationwide have bettered their fixed rates. A 5 year fixed rate with them is now 6.18% with the same product fee, free valuation and free basic legal work.

As the application is still ongoing, I asked could I get switched to the lower rate, which was agreed, however they say they MAY charge a second arrangement fee.

Obviously they hold all the cards as they hold all the money - but are they allowed to do this?

I'm sure if I decided to withdraw my application then the product fee would never come into question, but why should they be able to charge a second arrangement fee when all I want to do is go with a better rate during an application process?

Thanks!

dunstonh

Obviously they hold all the cards as they hold all the money - but are they allowed to do this?

Yes they are. You have paid for one product for which the Nationwide have allocated funds for. You now want to buy a different product.

but why should they be able to charge a second arrangement fee when all I want to do is go with a better rate during an application process?

Think of a fixed rate mortgage as a retail product. You bought one product and now you want to buy a different one. When you buy two items you pay twice for it.

declanmcc

Thanks for your reply dunstonh.

The thing is I haven't actually bought anything yet.

If I went into Tesco and bought £50 of shopping twice over, then I'd expect to pay £100 - but I would have £100 worth of goods to show for it.

This is all still in the application process, no money has exchanged hands, so technically I haven't been to the checkout and bought anything yet.

Toughluck

hi declanmcc

Trouble is if every man and his dog did this lenders may need to open up new departments to deal with this sort of query.

Don't get me wrong some lenders do this. As you have not completed change lenders. I am sure that nationwide are doing nothing wrong in this. they have set aside funds based on the rate you applied for and how much work do you think the lender has put into you already?

Just because something better has come along from the same lender does not mean you can just change products all the time. The analagy with Tesco is different, you take an item back and it takes 2 minutes no more with them. This is a massive investment for you and based on the market conditions you should be grateful you can get a mortgage if I am honest.

stevenj

Declanmcc, I agree with you. I am in the same situation with Nationwide. While there may be nothing wrong with what they are doing, as a customer, it still feels like greedy profiteering. I have also tried to complain but to no avail. If the 6.14% deal wasn't such a good rate, I'd be very tempted to tell them to stick their £599 fee and just go elsewhere!

Tiddler_2

Guys you have to think about it if it happened in reverse.

If rates went up, and you had made your application, you would want them to stick by the original deal wouldn't you?

Nationwide like the majority of other lenders have to buy the money they lend out, they then set the price (via interest rate & arrangement fee) to the customer.

You bought at a time when the price was higher - if you want to use the analogy of Tescos, if you went in today and bought a 2 loaves of bread and paid 90p each - you stick one in the freezer. This week you go in and they've got the same loaves on sale at 75p, do you go home and get your loaf out of the freezer, ask for your 90p back so you can buy one at 75p?

Like others have said, you could just walk away - or try re-applying from scratch, they may not match it up with the original application, but then again they might.

declanmcc

London & Country say they will let me know if Nationwide intend to charge a second arrangement fee. If they do, then L&C will ask for it to be waived. If it is waived then great, if not, then I may scrap the application and start again.

Serves me right for trying to start my remortgage application early lol.

Dan_Collins_2

Yes and yes, they brought this in a little while ago. They also say in the KFI that if you pull out they can charge the fee also.

The lender will be losing money because you go for a better rate and they have secured the lending on the higher rate.

What would you do if they pulled it way from you after you had say, paid for a valuation fee. you may want a refund!

thescouselander

This is probably too late but I was told by mortgage advisor that it is usually best to add the arrangement fee to the mortgage and this often means if you dont go through with the mortgage for whatever reason you dont get charged the fee. You can then repay the fee by means of an overpayment if you want.

Dan_Collins_2

Thescouselander, I have always done or did the same. Although some lenders including NWide will charge you.

They are picking and chosen and what they lend to and how they do it. We are now in there hands!

declanmcc

declanmcc wrote: »

London & Country say they will let me know if Nationwide intend to charge a second arrangement fee. If they do, then L&C will ask for it to be waived. If it is waived then great, if not, then I may scrap the application and start again.

Serves me right for trying to start my remortgage application early lol.

Just to let you know - Nationwide WILL be charging a 2nd arrangement fee - not happy!!