do arrangement fees have to be added to mortgage?

susie51

Just applied for a tracker mortgage with first direct and they seem insistant that the £999 arrangement fee is added to the mortgage loan? this obviously will put our payments up.

Do we have to do what they say, or can we insist to pay the arrangement fee up front, and just borrow the amount we need?

latecomer

I'm not sure whether First direct require you to add the fees but normally you can simply pay them. Thats what I've done with every mortgage I've taken out.

If you have to add it to the loan, are you allowed to overpay? If so then simply overpay by the amount of the fees as soon as you can.

susie51

yes I can overpay - i just wondered why they were being so insistant.

latecomer

Because if you add it to the loan then you have to pay interest on it. You'll probably find the advisor gets a bonus for persuading you to add it to the loan.

I've just had a quick look on the First Direct website and all it says is that its payable on drawdown which to me suggests you can simply pay it. Next time you speak to them just ask whether the mortgage offer requires you to add it to the loan and ask exactly where in the terms and conditions it states this.

Waldir

With Halifax 2 years ago, I also had to pay a higher interest rate on the arrangement fee than on the rest of the mortgage (the mortage was a fixed rate, and they were applying the SVR on the arrangement fee)

feisty1

latecomer wrote: »

Because if you add it to the loan then you have to pay interest on it. You'll probably find the advisor gets a bonus for persuading you to add it to the loan.!!!!

HOW COULD U MAKE SUCH A REMARK?

What is this based on? please give us one example.

_Andy_

latecomer wrote: »

You'll probably find the advisor gets a bonus for persuading you to add it to the loan.
.

That won't be the case. An extra thousand or so isn't a big deal so isn't going to warrant a 'bonus' for having it added on.

Wutang_2

feisty1 wrote: »

latecomer wrote: »

Because if you add it to the loan then you have to pay interest on it. You'll probably find the advisor gets a bonus for persuading you to add it to the loan.!!!!

HOW COULD U MAKE SUCH A REMARK?

What is this based on? please give us one example.

Can you provide one example that they don't?

And can you lay off the red text?

latecomer

feisty1 wrote: »

latecomer wrote: »

Because if you add it to the loan then you have to pay interest on it. You'll probably find the advisor gets a bonus for persuading you to add it to the loan.!!!!

HOW COULD U MAKE SUCH A REMARK?

What is this based on? please give us one example.

It appears that they are pushing hard to have it added to the loan despite it not being required by their terms and conditions.

I'm sure quite a few companies would be happy to part with a few quid for the extra £100+ it would get them over a couple of years.