Mortgage product transfer fee

fh97

Hi

My current lender is charging me £395 to move to another mortgage product with them. This is excessive, unjustified for the effort of a few input keystrokes by a operator and the computer to recalculate the payments and send paper work out (i work in computing industry); which they have to do anyway.

has anybody got them to reduce or not pay these charges. They have already given me the speel as to why they have these charges. Totally unconvinced though !

thanks

herbiesjp

Have you looked to see if it would beneficial to move lender after taking into account fees/costs etc?

fh97

Yes i have looked at remortgages; another lender is charging me £400 on top minus all fees to remortgage. so i might be better off with current lender, 4.59% plus overpayments

herbiesjp

What figures are you looking?

Property value?
Mortgage amount needed?

Who is your current lender?

fh97

144K mortgage, current lender 4.59% 2 year fix monthly interest.
new lender 4.55% 2 year fix daily interest total fees for transfer including extra bits because my current lender calculates interest monthly = £1350.

new lender - current lender =

1350 - (395
(+ current lender monthly interest lost
+ new lender extra bit for 1st month payment
+ loss of current lender monthy interest overpay 2 years )
= £450


so i will £450 worse if i switch.

We want to overpay by 10K + ongoing monthly payments of £150.

Are we better with current lender or new one considering we are going to overpay

TangentMan

The price of a product is a component of its rate and its fee as well as some admin costs.

I don't wish to appear rude, but working in the computer industry wouldn't make you an expert on the cost of funds that the lender incurs when buying the money to sell onto you. To be fair to the person explaining this to you (who also had to be paid of course, and the captial cost of the euipment and premises they use has to be recovered).

If they have a good process (perhaps they can OCR the form) then they can cut the admin down, but they aren't a charity and have to make a profit and recover their costs somehow.

Having said that there are plenty of fee free products on the market - although not cheap fixed rates (since they cost more money to fund, see above).

fh97

Hi

I have worked for the banks and developed mortgage banking products so i am reasonably qualified.

but i wish you would answer the original question instead of passing comments and assuming what is a reasonable cost.

I don't care if they are using magic to process my application for products why do have i to pay £395 every two years to get a piece of paper which has already been sorted out legally and i already know.

dunstonh

If you know how the mortgage products are built, you will know that they incur costs in dealing with your application and having to "buy" funds to agree the terms they can offer you.

The change of terms involves lending at different terms and this has to be budgeted for.

fh97

ok what about the booking fee i paid up front. Sounds like the banks are skimming money from us again and justifying it as a necessary cost.

TangentMan

Do you mean your first product fee? That was part of the price of your first product. If on the other hand you ahve already paid them a booking fee for this product switch and they want another fee on top of that then that does sound high.

If you swap every two years you are buying a new product every two years and, if the product you want has a fee, you pay the fee.

I am not passing comments i am trying to explain that a mortgage product is based on buying money on money markets, paying insurance /hedging costs and making some profit. And that is just the financial cost. The people who do it have to paid. The buildings they sit in have to be paid for. The marketing of mortgages, the computer systems, their backup systems, the network, pensions all have to be paid for.

Think of it like changing cars every two years.