Mortgage Arrangement Fees

typeractive

Hi,

Can anyone confirm that arrangement fees which are paid up front come off the agreed loan: e.g. once these are paid does that lower the amount of the loan you want to loan? for example a loan of £100,000 with an arrangement fee of £995, would be a loan of £99,005 I am left to pay over the term?. Am I correct in my thinking?, or

Would it be: £100,000 plus £995? = toal of £100,995 to pay over the term?

I just want to double check.

Many thanks

opinions4u

typeractive wrote: »

Can anyone confirm that arrangement fees which are paid up front come off the agreed loan: e.g. once these are paid does that lower the amount of the loan you want to loan? for example a loan of £100,000 with an arrangement fee of £995, would be a loan of £99,005 I am left to pay over the term?. Am I correct in my thinking?

Incorrect. But nice idea!

Would it be: £100,000 plus £995? = toal of £100,995 to pay over the term?

Correct.

The fee should be treated like interest. It's a charge for borrowing money. I'd also suggest not charging it to the mortgage, as it will accrue additional interest for the term of the mortgage!

typeractive

opinions4u wrote: »

The fee should be treated like interest. It's a charge for borrowing money.

Thank you - at last someone was able to clarify!

It's a shame I got it wrong

That means I need to go back to my calculations again to see what mortgage deal is best for me.

I'd also suggest not charging it to the mortgage, as it will accrue additional interest for the term of the mortgage!

Do you mean try to pay the fee off in one go, rather than adding it to the mortgage? If that's what you mean I don't think there was any option to add these fees to the mortgage - they need to be paid on completion of the mortgage.

Thanks

opinions4u

typeractive wrote: »

Do you mean try to pay the fee off in one go, rather than adding it to the mortgage? If that's what you mean I don't think there was any option to add these fees to the mortgage - they need to be paid on completion of the mortgage.

Some lenders allow it. Other don't. But yes, that is what I meant.