Switching deal - existing bank

MDL74

Hello

I am currently looking at switching deal with my existing bank to get off the SVR and onto a 5 year fix

My bank is asking me to pay a £999 product fee for switching on to the new deal.

What would this £999 cover? There wouldn't be any additional admin (well, not to the tune of £999) and there aren't any solicitor fees to cover so how can this be justifiable?

Are Watchdog aware or should i just accept this 'tax'?

NB i know i can avoid this fee but the rate will be almost 0.5% higher

Is this the new PPI? Will i be reclaiming this back from them in years to come via a Martin Lewis template?

kingstreet

No. It's factored into the cost.

You'll find if there was no product fee, the rate would be higher.

Why don't you look at remortgaging, then you'll have cheaper rate/fee options to consider?

MDL74

i am remortgaging and with my existing provider - hence why i don't think it's strictly legal/moral to be charging a fee as they're not actually doing anything for my £999

Yorkie1

It's completely legal and moral. Some people have cash up front and therefore want to reduce their monthly outgoings (and so go for the fee-based product); some people don't have spare cash and therefore either add the fee onto the mortgage or go for the fee-free higher-interest option, which allows the lender to recoup the overall cost through a different route.

Product fees are not just to cover admin costs; they can be to reserve the funds behind the mortgage - the lender borrows the funds from elsewhere and has to pay for this.

If you don't like it then you are free to go elsewhere as others have said.

kingstreet

It is not an administration fee, so stop behaving like it is.

The rate swap arranged by the lender to fund the deal has three components, the fee, the rate and the early repayment penalty.

If you change one, the others have to change to mantain the balance.

As I said, if you don't like it, find a fee-free deal elsewhere.

...and stop calling it a remortgage. There is no change to the mortgage deed from a product transfer/customer retention product, so you'll confuse people using inaccurate definitions for what you require.

Thrugelmir

MDL74 wrote: »

i am remortgaging and with my existing provider - hence why i don't think it's strictly legal/moral to be charging a fee as they're not actually doing anything for my £999

Totally legal. Not immoral.

Product fees are in place to discourage applications. As lenders seek higher balance borrowers to advance money to.

Called running a business.

Explore the market for other options.

getmore4less

MDL74 wrote: »

i am remortgaging and with my existing provider - hence why i don't think it's strictly legal/moral to be charging a fee as they're not actually doing anything for my £999

Supprised noone has chipped in yet with

If it is the same lender it's not a remortgage.


If you want to avoid fees then the best option is to get the lowest cost tracker you can find, never need to change again unless you find a better long term tacker.


Most people have no need to fix but the market likes people to churn their debt so they can cream a bit more off all round.

kingstreet

getmore4less wrote: »

Supprised noone has chipped in yet with

If it is the same lender it's not a remortgage

I did. See #5.

_Andy_

"Are Watchdog aware or should i just accept this 'tax'?

NB i know i can avoid this fee but the rate will be almost 0.5% higher

Is this the new PPI? Will i be reclaiming this back from them in years to come via a Martin Lewis template?"

1) No, yes
2) There you go then - you've got options
3) No, no

MDL74

(Text removed by MSE Forum Team)

My point stemmed from an explanation of a 'product fee' which described it as being a charge for administration. As i am switching my deal with my existing bank i questioned the validity of such a charge because there is very little, if any, administration in doing so. In fact, if i were to do this online, i would actually receive a payment back. If i was switching provider then i could understand there being a charge as there would be a certain amount of admin to undertake.

Normally when i am paying money out, i would expect to receive a service/product in return. In this case I don't understand how an admin fee of £999 is justifiable.

This being a 'moneysaving' forum, i would have thought that any evidence of dishonesty, especially from the banks, would have been welcomed.
Obviously not, well, not where the posters on this thread are concerned.

"And product fees are in place to discourage applications" Really... you really think that? Surely higher rates would discourage applications, i'm not sure this applies to product fees.

"Most people have no need to fix but the market likes people to churn their debt so they can cream a bit more off all round." Really? I'd love to see what your definition of 'most people'. Is this research you have done yourself?

glosoli

stop crying about it

either stay on your current rate, cough up the £999, or switch lender.

the guys above have gave sound responses and you respond like an oaf