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Building Society mortgage `arrngement fees`

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Building Society mortgage `arrngement fees`,

Can anyone shed light on what these `fees` are for? Or is it the case that they are a mechanism to screw extra money from gullible punters ??

If as I suspect they are simply a revenue generator for bigger shareholder profits is there a legal case to reclaim these charges ?

horace. :confused:
«1345

Comments

  • david29dpo
    david29dpo Posts: 3,903 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    arrangement fees tend to be higher the better the mortgage deal, likewise the redemption penalties. yes one could say it screws extra money from punters but no one holds a gun to your head when you sign. the simply answer is they charge because they can. you haven't got a cat in hells chance trying to reclaim arrangement fees.
  • horace_2
    horace_2 Posts: 636 Forumite
    David29dpo.
    Thanks for your reply but I think you miss the thrust of my question.

    To put it another way, if the mortgage provider is not undertaking some type of task for which the fee is levied is it not a fraudulant charge?

    If as you suggest, they charge a fee because they can it could be construed as an unfair condition which could be actionable.:confused:

    horace
  • 1jim
    1jim Posts: 2,683 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Im not sure about that, some call it a reservation fee (so they are reserving the funds for you), others call it an arrangment fee and I guess they charge for arranging the mortgage (doing the paperworl/resrving funds etc)
    cant really see that you could win on this as I think with the bank thing they were charging you as a "punishment" for going over your limits which they legally cant do... here they are just charging you because they can and you agree to it before paying
  • ohmsoft
    ohmsoft Posts: 280 Forumite
    The real economic truth of the matter with these (and some of the other charges) is if they wern't there the banks wouldn't be able to offer the rates they do (unless shareholders suddenly stopped caring about profit).

    Since mortgage regulation these charges are clearly laid out in lenders KFIs sent before the application is signed - the best bet, with hingsight, is to search around and play the lender for a waiver or discount before you sign...then they have the choice of accepting your buisness or not (with margins as they are - it would usually be the latter)
  • horace_2
    horace_2 Posts: 636 Forumite
    >> 1jim.
    Interesting reply.

    It strikes me however that Banks and Buildng Societies are not any different to other businesses seeking our custom. I`ll give you an example.

    Mr Shopper visits Sainsbury`s, he views their wares and selects x number of products places them in his basket and proceeds to the check out to pay.
    The cashier then says "In order to purchase these items we require a one off payment of £1.00 to cover our arrangement costs. These are the costs of purchasing the products to put on the shelf, delivery, advertising cost etc"

    Does Mr Shopper fall for this argument? I think not.

    So, when it comes to financial products why should the punter pay for the costs of Building Societies bringing their products to market?

    Indeed if all Building Societies make charges described could it not be said that a cartel was in existance?

    horace
  • I tell you what, I work for a Building Society so I am going to offer you a choice of two products, one with a fee and one with out. One rate is at 4.85% and one is at 5.85%. Have a guess which one has a fee and which one doesn't?

    Having been party to pricing models, fees actually make a big differnce to the rate a lender can look to offer. Hence the reason why you see a lot of rates with high fees because lenders are trying to price their rates as low as possible.

    As a Building Society, we offer products with fees and without fees. As a customer you are entitled to want the best rate, it is your progative, but don't expect that to come without cost. If you don't want a fee then take the higher rate, oh sorry that isn't the best rate. Okay take the best rate then, oh sorry that has a fee. I guess the crooks of the matter are you can't have your cake and eat it, as long as there is the choice then you can do what you think is right in your situation.
  • 1jim
    1jim Posts: 2,683 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    horace wrote:
    >> 1jim.
    Interesting reply.

    It strikes me however that Banks and Buildng Societies are not any different to other businesses seeking our custom. I`ll give you an example.

    Mr Shopper visits Sainsbury`s, he views their wares and selects x number of products places them in his basket and proceeds to the check out to pay.
    The cashier then says "In order to purchase these items we require a one off payment of £1.00 to cover our arrangement costs. These are the costs of purchasing the products to put on the shelf, delivery, advertising cost etc"

    Does Mr Shopper fall for this argument? I think not.

    So, when it comes to financial products why should the punter pay for the costs of Building Societies bringing their products to market?

    Indeed if all Building Societies make charges described could it not be said that a cartel was in existance?

    horace

    But you do have a choice, you can choose not to buy from that shop, you can choose to go to Mr Sainsbury and pay his £1.00 surcharge and get a tin of beans for 15p
    or
    you can choose to go to Mr Waitrose who does not charge £1.00 to cover his fees and pay 30p for your tin of beans instead

    You have to choose who to shop with given your own circumstances as long as I can see the charges before I buy I am happy with them
  • ossie1_2
    ossie1_2 Posts: 39 Forumite
    millsy1980 wrote:
    I tell you what, I work for a Building Society so I am going to offer you a choice of two products, one with a fee and one with out. One rate is at 4.85% and one is at 5.85%. Have a guess which one has a fee and which one doesn't?

    Having been party to pricing models, fees actually make a big differnce to the rate a lender can look to offer. Hence the reason why you see a lot of rates with high fees because lenders are trying to price their rates as low as possible.

    As a Building Society, we offer products with fees and without fees. As a customer you are entitled to want the best rate, it is your progative, but don't expect that to come without cost. If you don't want a fee then take the higher rate, oh sorry that isn't the best rate. Okay take the best rate then, oh sorry that has a fee. I guess the crooks of the matter are you can't have your cake and eat it, as long as there is the choice then you can do what you think is right in your situation.


    Good reply. Worked for a top 10 lender for 20 years until I changed recently and this is spot on. Life is about the freedom of choice and that is exactly what we have. With 99% of lenders, their best rates incur fees, their not so best rates dont. somewhere in between you have a moderate rate with a moderate fee so there is usually huge choice for the prospective purchaser.

    Every mortgage is run through a profitability model to ensure it is profitable. The fees, if charged, are neither unlawful nor inappropriate. Therefore, no prospective purchaser would be able to reclaim them if they disagreed with them. If you are not happy, change the product.
  • horace_2
    horace_2 Posts: 636 Forumite
    >>> millsy1980

    Temper, temper, temper. Are you not a money saver ??

    So, from your post are we to conclude that your Building Society (of which you appear to be proud) deliberately confuse the public at large in an attempt to gain business?

    I think we should be told.

    horace
  • horace wrote:
    >>> millsy1980

    Temper, temper, temper. Are you not a money saver ??

    So, from your post are we to conclude that your Building Society (of which you appear to be proud) deliberately confuse the public at large in an attempt to gain business?

    I think we should be told.

    horace

    Not a temper mate, just tired of having to deal with customers who always want the unrealistic. You are bang on when you say I am proud of the Building Society who I work for, as I think we offer good value products and excellent service. But I am intrigued upon where in my post I indicate we deliberately confuse the public to gain business?

    We operate in a regulated industry where all information is offered up front, so therefore you are told? If you want a fee based product then the fee will be explained to you. If you want a product without a fee you will be offered what you require? If that is at a higher rate then it will be due to the pricing model. We are a business and we have to make money to exist. If charging a fee makes the interest rate lower which appeals to the customer then so be it, as stated before you have another option.

    I am a money saver, but I don't go asking my gas and electricity company for free usage for 6 months of the year! I don't ask my builder to build an extension but not to charge me labour costs!
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