Add Arrangement Fees to Mortgage

ziof3ster

Hi,

can someone explain how calculate the deposit, rate etc once the arrangement fees have been added to the mortgage?

Thanks
Gio

RedFraggle

Just add it to the loan amount, then do the figures.

ziof3ster

RedFraggle wrote: »

Just add it to the loan amount, then do the figures.

Well can you make me an example??

Let say

200000 property value
50000 deposit
150000 loan amount
5000 arrangement fees

in this case the LTV is 25%, how should I calculate the figures?

Thanks
Gio

Thrugelmir

"Google" - mortgage calculator.

Enter total amount borrowed.

Interest rate

Mortgage term in years

Deposit makes no difference to calculation.

ziof3ster

Thrugelmir wrote: »

"Google" - mortgage calculator.

Enter total amount borrowed.

Interest rate

Mortgage term in years

Deposit makes no difference to calculation.

I'm more interested in find out:

the new deposit needed
how maintain the LTV 25%

Thanks
Gio

GMS

ziof3ster wrote: »

Well can you make me an example??

Let say

200000 property value
50000 deposit
150000 loan amount
5000 arrangement fees

in this case the LTV is 25%, how should I calculate the figures?

Thanks
Gio

The LTV in this case is 75% for product selection purposes, assuming the lender allows arrangement fees to be added without affecting product banding.

Actual LTV would be 77.5%.

If you choose to pay the arrangement fee up front then LTV would be 75%.

£5,000 is a hell of an arrangement fee though. May be worth paying a higher rate and getting a lower fee.

Work out payments using a calculator as suggested on the total amount borrowed whether fee added or not.

Thrugelmir

ziof3ster wrote: »

I'm more interested in find out:

the new deposit needed
how maintain the LTV 25%

Thanks
Gio

Add the fees to the property price.

Multiply by 75%. = mortgage

Multiply by 25%. = deposit

ziof3ster

GMS wrote: »

The LTV in this case is 75% for product selection purposes, assuming the lender allows arrangement fees to be added without affecting product banding.

Actual LTV would be 77.5%.

If you choose to pay the arrangement fee up front then LTV would be 75%.

£5,000 is a hell of an arrangement fee though. May be worth paying a higher rate and getting a lower fee.

Work out payments using a calculator as suggested on the total amount borrowed whether fee added or not.

Hi,

as Thurgemir below said I

75% of (200000 + 5000) will be the amount borrowed
25% of (200000 + 5000) will be the new deposit.

is it correct?

This wont affect the product bonding. But, as the 5000 fees are a percentage of the amount borrowed (in this example 3.333%) ...I'm borrowing more

in particular

borrowing 153750

making the morgate fee going to 5125!!! :-)

This is why I'm confused :-)

Thanks
Gio

beecher2

If you borrow £155,000 on a property worth £200,000 then your LTV is 77.5% as already said.
If you need to keep the LTV at 75%, then you have to pay the £5,000 in fees upfront.

You won't be paying a fee on the fee I don't think - they should be calculated on the amount borrowed for the mortgage without including the fees, but phone up your lender to make sure.

ziof3ster

beecher2 wrote: »

If you borrow £155,000 on a property worth £200,000 then your LTV is 77.5% as already said.
If you need to keep the LTV at 75%, then you have to pay the £5,000 in fees upfront.

You won't be paying a fee on the fee I don't think - they should be calculated on the amount borrowed for the mortgage without including the fees, but phone up your lender to make sure.

well but if my deposit is not anymore 50k but 25% of 205K, I'm still in the 75% LTV ...isn't it?

GMS

ziof3ster wrote: »

well but if my deposit is not anymore 50k but 25% of 205K, I'm still in the 75% LTV ...isn't it?

Look at the amount of borrowing so 150k in this case. The fee is 5k.

150k against 200k value is 75% LTV. This is how a product will be selected so you would be in a 75% product.

Adding the 5k fee would take your actual LTV to 77.5% but if the lender allows fees to be added without affecting LTV you would still get a 75% product.

Your arrangement fee is based on your borrowing (in the case of a % fee) not the borrowing plus the fee.

You really should look at alternative deals with a fixed fee for comparison. Paying 5k just to secure a low rate may not be the best overall.