mortgage set up fees

jacqssmithd

With all the recent talk of mortgage exit fees, i am interested what people's advice is on the excessive set up fees that mortgage lenders now have.

I just recently transferred to a new product, with no exit fee but a very large set up fee of £799. I can not fathom how setting up a new mortgage costs £799 given that it is with the same lender, requiring no assessments etc.

Could you please let me know whether they are legally allowed to charge such huge fees for a simple process.

ManAtHome

The illegal bit of the exit fees is when they increase them during the term (eg you sign up for £50 then get hit for £200). Set-up fees are part of the package - you accept or decline depending on how much you're borrowing, the interest rates and term (high set-up and lower rates will have a "break-even" depending how much you borrow).

All businesses will charge cost plus something for a product or service - not illegal (even if morally dubious).

david29dpo

correct. the fact with set up fees, you have a choice. pay it and get a cheaper rate, or dont and get a dearer rate. the illegal fees are the ones which have no control over.

kingychapman

It does seem to be correct that Lenders can charge what they want with the promise of cheaper rates BUT I agree they can be very steep. There are also the additional charges you incur ontop of a high fee I have had to pay for a valuation - £450! I live in the South East - in an area where properties have risen dramatically in the last few years - I did suggest to my lender that I would pay a nominal amount for someone to come in and look at my house to make sure I had not demolished it. I only want to borrow 50% of the value! so why was this required. It makes me so cross, is this a way for valuers to stay in business. There are other charges too, Chaps payments to transfer the money between lenders, Telegraphic charges if for the privilige of having any excess money put into my bank account, I think this should be taken out of the arrangement fee.

I made the fatal mistake of going to a mortgage broker who charges £250 and receives over £1,000 from the lender, but so far am not impressed, it was suggested that I add my fees to the loan But the lender charges the variable rate if I do that so starting fees of £1500 could end up at £3,000...
Mortgage companies need to be looked at in detail, where a deal seems good there always seems to be a catch.

geekboy

I'm a noobie and a layman, but I don't see a problem with these arrangement fees. Lower rates will tend to have higher fees. A low rate/high fees combo will tend to work out cheaper for a bigger loan.

Just work out how much your repayments are over the term, add the fee, and you have the cost of your mortgage. Do the sum for your case, and you can immediately see which mortgage is cheapest.

regularsaver1

another post about these arrangement fees? how many?

ManAtHome

Yes, they're all trying to get the same business, and seem to have twigged that a significant number of people will sign up for 1% less interest with an extra 10% upfront charge.

If you can be !!!!!d to stick the numbers into excel you'll end up with the best deal - if you can't, you won't...

geekboy

this...

ManAtHome wrote:

If you can be !!!!!d to stick the numbers into excel you'll end up with the best deal - if you can't, you won't...

is the crux of the matter.

(Or you could pay a good advisor/broker to do it for you, if you're not confident with numbers. Those maths lessons are paying real-money dividends now )

Fairdo_2

Or you could get a Mortgage Broker to look at it that won't charge a fee.

As previous poster mentioned they paid a £250 fee and received over £1000 in commission, that seems a great deal for the Broker. I would expect a Broker to be able to cover their costs by topping up a commission with a fee if the loan is small and therefore, they need to charge a broker fee (disclosed up front mind!) but Brokers should also work on market forces aswell as lenders and if you aren't prepared to pay for the advice on top then state that you will walk away. They may change their mind and do it for free.

sirwin

Hi

I have been through the same thing, I had to pay £300 for a valuation and £400 for a fixed fee mortgage. In the end they valued my house way under what is was worth so I could not remortgage, therefore lost all the £700 and was forced to sell my house, which I sold for £12,500 more than the valuation fee.

Please can anyone let me know if I should try to reclaim these fees.

Thanks

danjberry

no - if the valuer did not value the property high enough you could of provided comparables for him/her to look at in order to change the valuation.