Mortgage Arrangemtn Fee Question?

user24

Hi,
I have a question regarding mortgage arrangement fees.

Say the fee is £995 and i add it to the loan. The mortgage is a fixed rate for 5 years and the term of the mortgage is say 25 years.

I assume they add the 995 to the total balance payable over the 25 year period. But what happens when the 5 year fixed period is up and i change provider will there be an outstanding amount payable for the arrangement fee, as this would not have been payed fully within the 5 year period? So would they hit me with a bill at the end of the 5 year fixed period if i changed provider?

Hope that all makes sense.

Thanks

Thrugelmir

user24 wrote: »

So would they hit me with a bill at the end of the 5 year fixed period if i changed provider?

Your logic is correct. A proportion of the original fee would still be outstanding.

Over 25 years at an average 5% interest rate. You would pay £750 in interest on the product fee.

Goldiegirl

The wouldn't hit you with a bill as such, but if you redeemed your mortgage, the amount of money required to close your mortgage in full would include the remaining unpaid portion for the arrangment fee.

_Andy_

Don't think of it as a separate entity, it simply means you're increasing what you're borrowing.

user24

Hi guys thanks for your replies, they will certainly help when making my decision on which deal to take.

Many thanks

Thrugelmir

Factor it into comparisons. If possible pay the fess upfront.