Arrangement fee help

leeg74

I'm new to this site so I would appreciate a little bit of help.

I've recently just finished my 3 year flexible deal with Direct Line and they told me as the deal was coming to an end I would be paying the SVR from the end of this month. I want to stay with them however, as they have been pretty good with my mortgate and I rang them to enquire about a fixed rate mortgage which would be better suited to me as I pay the same amount every month. When I quoted my ref no, they said oh this was one of their old accounts (bought the house only 3 years earlier), and I could have the fixed rate deal but would need to pay an arrangement fee of £499 to put me on the new account system.

My question is this....Surely me keeping my business with them is important, and why should I have to pay this arrangement fee when it is Direct Line that want to bring my account up to the present date. Also what is to stop them, say in another 5 years when my fixed rate deal runs out, saying my account is out of date again and charging me another arrangement fee? Is this a fair charge or should I be challenging this? Do other companies charge you another arrangement fee when you stay with them and get a new deal?

KTF

Almost every fixed rate has an arrangement fee as this guarantees you the rate of interest for the term. The fee you pay 'buys' you that product. If you dont like that then stick with the SVR or choose another product with a lower fee.

When your new fixed deal will come to and end there will probably be a charge for the next fixed rate (assuming you pick another one).

MarkyMarkD

Keeping your business is important, but not at any cost. Most mortgage products lose the lender money and it is the arrangement/switcher fees which make them financially worthwhile for them. The exceptions are products where the rate isn't very competitive which are only really suitable for those with smaller value mortgages.