Arrangement fees, Sealing fees

Chick

Hello,

As a FTB I am very new to the various jargon etc. surrounding mortgages.
Could anyone define a 'sealing fee'- I've seen this quoted around the place, approx £250

Also, is there such thing as an average 'arrangement fee'- sorry, another 'how long's a piece of string' type question! It's just they vary so widely, I imagine the lenders make their money in the end e.g. with the cost hidden within the mortgage rather then upfront? I guess that way a no fee mortgage looks v attractive.

What is this arrangement fee all about? if you are going to a lender who offers a mortgage, why is an arrangement fee necessary- do they in turn have to pay someone to get it sorted or is it another way of 'legitimately' boosting profits for them?

cheghead

Click on 'ARTICLES' just to your left. Lots of info about mortgages there!

lisyloo

Hi Chick,

The "sealing" fee is something you pay at the end of the mortgage.
If you are going to re-mortgage a lot e.g. every two years then it's something to take into account as they vary. It's usually not a big factor in the decision. Fees for leaving a mortgage vary between £0 and £300.

There is no average arrangement fee, I'm afraid you have to look at every deal individually. They can be anything from £0 to £700 or possibly more.

Lenders do have a certain amount of work to do to set up a mortgage for you. There will be their internal customer reords, billing and they will have to do credit checks.

Different mortgages are packaged differently as you say. Some have no fees, but higher rates. The ones with really low rates, tend to have fees associated. Obviously they can't operate at a loss.
Which one is best depends on what you are looking for e.g. peace of mind with fixed payments, flexibility etc,
whether you have money up front to pay for fees and the size of your mortgage.

You need to find out the details in each case and do the sums.
Don't be attracted by deals simply because they have no up front fees. It might not be cheapest.

bbruce

Of course all fees are just a way of getting more money out of you whilst appearing to remain competitive. It makes it harder to compare companies so intermediaries step in to help (for a fee). If they want to sell you something they necessarily have to process paperwork in all manner of ways. The other option is to build it in which is what retailers have to do but then comparison would be easy.