OMG! £2600 arrangement fee!!!!!

apk1

The fee bears no resemblence to the cost, but it is part of the deal, factor it into the total cost over the 2 year period, then look at another deal over 2 years with no or little fee, which works out cheaper, its your choice, I suspect if the mortgage is a reasonable size then it will be worth biting the bullet and paying the fee.

dunstonh

No, you are misunderstanding my point. The reason it is unfair is becuase the actual COST to them to set up and administer to Mortgage is nothing like the £2600 they are quoting. They are just offering a lower rate and trying to claw back some £££ by shafting you on the arrangement fee, which is an underhand tactic.

If it were a fee that accurately reflected the work involved in setting up the mortgage and maintainng it then there would be no problem, but we all know that the costs to the BS in question is NOTHING like that amount.

How do you know that it doesnt reflect the work and costs involved in the bank itself borrowing that money to be able to offer it at that rate?

The bank also has to factor in a profit margin.

This type of fee is very different to redemption penalties. It doesnt have to reflect the work done.

You say they are shafting you by doing this but many people would be better off on this mortgage than one with a low arrangement fee. So in what way are they being shafted?

Also, it cannot be underhand if it is disclosed in advance.

Mr_helpful

As usual there are people talking crap about fees being better with a large mortgage. The fee referred to here is i think 2% of the loan which means it goes up with the loan. and no you cant compare it just over the fixed period with something with lower fee higher rate coz that fee will still be there are the end of the deal.
The reason for these fees is the lender keeping its business up especially in the BTL market where fees of 3.5% are coming in by making the mortgage look affordable with low rates people are being mugged into thinking all was well with the property market.
Theres a lot of !!!!!!!! about the transparency of the fee but how can that be so when it is used to mask the true interest rate being charged.

dwight-van-man

At the end of the day, Portman and everyone else offering deals with high arrangement fees are only doing it because brokers and the public are so used to cheap two year fixes that no lender will put their head above the parapets and release a product range which accurately reflect the cost of buying in fixed rate money on rate alone. The profit margin on a 2 year 4.99% deal will be negligible - Portman have probably manged to limit the fee to £2600 because they are using their savings reserves to fund part of the tranche. I really don't get the problem - if you don't want to pay the fee, don't. Most lenders are now offering a multi tier range which caters for most requirements so its not like they've got you over a barrel

TEDDYRUKSPIN

As above. I want to say this!! NOTHING IS FREE IN LIFE! What looks like a good deal or a sale, is not!

Below 90k look for no booking fee.
Above 100k, worth paying a booking fee.
Above 500k definitely going for the best rate.

kamlesh_2

Looks like every one missed the point here ! Its amusing to read all these replies especially the ones that say "read the print" !!!

If you goto the website Leeds building society website :
http://www.leedsbuildingsociety.co.uk/mortgages/latest_rates_fixed.html

It shows the 4.99% deal with an arrangement fee for mortgages upto £500k as 2% of the loadn amount ! thats £10,000 arrangement fee for £500k !!!!!!!!!! So of course it is not a good deal for any one !

It really is a con! To try and hope that some one thinks they get a good deal by looking at the gross interest rate !

jamesd

kamlesh, it's worth comparing that deal with no early repayment charge to their others with early repayment charge or no fee. It looks like a fairly cheap deal compared to their others. That's not intended to be a compliment.

elDeeJay, the initial charges aren't supposed to be only the costs of setting up the morgage if you're buying a lower interest rate. You pay up-front for the reduction in rate. Same for the elimination of the ERC, which transfers more interest rate risk to the lender.

ManAtHome

Sounds like the ones saying "read the print" have it right...

You've read the print, you know exactly what it will cost over 2 years (5.99%), so what's the problem?

danjberry

elDeeJay wrote:

No, you are misunderstanding my point. The reason it is unfair is becuase the actual COST to them to set up and administer to Mortgage is nothing like the £2600 they are quoting.

The fee does not have to reflect the cost, how many times do people have to say this on this forum. If every single charge, product or fee had to reflect the true cost it cost to a bank/building society/business then there would be no profit. You are free to choose a different product just like everyone else, but then again why would you bother getting a mortgage as the interest rate you pay is making the company money so the rate is not the actual cost it is costing them so maybe you can claim this profit back as well.

Mr_helpful

Sooner or later the FSA will step in to the debate especially if enough of the public complain about the fees then I suppose we will have people spurred on by brokers jumping on the bandwagon asking for these fees back I believe the fees are a big con and will get caught up in the FSA's campaign on treating customers fairly. We will have to wait and see if Im right.