Mortgage arrangement fee

Moorepart

EchoFalls wrote: »

After 3 years, in December 2006 our mortgage was due for review, leaving us free to shop around for the best deal. My partner was encouraged by 'loyalty' products offered by our existing mortgage provider, Nottinhgam Building Society (NBS). I basically left it with him as he always has sound financial sense. He settled on a fixed rate product offered by NBS. We received the documents agreeing to a fixed rate mortgage. As usual, we're always so busy, therefore I signed the documents without really checking them, expecting the best deal as an existing customer. However I was horrified to realise the arrangement fee had been £495! This has caused me a great deal of distress; some loyalty product. I was particularly angry as my bank Natwest had offered the same fixed rate terms, with no arrangement fee as a first time mortgage account and I held an Advantage Gold account. The building society refuse to review the situation, - as we signed the agreement, and my fella sent the cheque (which has caused many tantrums on my part). NBS have confirmed in writing their final offer that they are not prepared to refund the amount, their correspondence has bordered on arrogance stating the arrangement fee is not covered by the legislation introduced by the FSA.Is there anything I can do, shall I refer it to the FSA or the Ombudsman, or shall I just have to accept that we really have been ripped off?

It winds me up that the cheeky !!!!!!!s also want you to pay an arrangement fee So not only are you borrowing money and paying them a fat wad of interest for the rest of your working life, they want you to pay them to set up the mortgage

toonfish

Moorepart wrote: »

It winds me up that the cheeky !!!!!!!s also want you to pay an arrangement fee So not only are you borrowing money and paying them a fat wad of interest for the rest of your working life, they want you to pay them to set up the mortgage

but you aren't paying them a "fat wad of interest" - that's the point. If you don't want to pay an arrangement fee simply choose a product with a higher rate and no fees.

The banks are in business to make money, just the same as everyone else.

dwsjarcmcd

Moorepart wrote: »

It winds me up that the cheeky !!!!!!!s also want you to pay an arrangement fee So not only are you borrowing money and paying them a fat wad of interest for the rest of your working life, they want you to pay them to set up the mortgage

If people knew the actual margins that lenders work to then they wouldn't spout such stuff. The only reason the people have to pay, in your words 'a fat wad of interest for the rest of your working life' is because people can't afford to buy houses without loans! Hardly the Building Societys fault. If you can afford to buy it outright you don't need to borrow for the house then you won't pay interest.

dunstonh

I bet half the people whinging about correct retail charges work in the retail or service industry themselves and sell products or charge for services.

MarkyMarkD

Funnily enough, I was just reading a Deutsche Bank "industry analysis" report this afternoon - as you do.

It showed a graph of average 2 year fixed rate margins for lenders over the last 7 years. Just to explain fixed rate margin = the rate charged to the borrower LESS the cost of the funds to the lender.

Over the 7 year period, the fixed rate margin has varied a lot. But according to Deutsche Bank's analysis, the average across the mortgage market - using Money Facts data - is currently worse than MINUS 0.40%.

That means that the lender is losing 0.40% per annum on your 2 year fixed rate mortgage, before they even think about paying their staff, their bad debt costs, their mortgage intermediaries for selling you the mortgage.

Is it any wonder that arrangement fees have gone up?

Even with larger and larger arrangement fees, there is next to no profit in mortgage lending - which is the precise point the Deutsche Bank report was making.

For those who are mathematically challenged, consider a £100,000 2 year fixed rate mortgage.

The interest margin is -£800 over 2 years.
The lender pays an intermediary around £400.
They pay their staff some money to set it up and administer it through its life as well - say another £200.

So, they are £1,400 down before they've started.

Even with a typical £500-800 fee and an MEAF of £200-300, there's no money there for a lender.