Is a "product fee" due with every remortgage?

vikkiew

Hi,

One thing I have not been able to get a clear answer on is whether the product fee (usually 999 or 995) at each remortgage whether simply 'switching' (getting a new deal with the same lender once previous deal expires to SVR) or a full remortgage moving to a different lender.

This fee, unlike every other number, does not vary with the duration so makes 2 year deals relatively very expensive. Am I missing something here?

Cheers,
Vikkie

flashg67

Depends on the lender I think. My last lender, Nationwide, had both with or without fee 'offers' for existing (and new) customers. The rate was slightly higher with no fee, so it does take some maths to work out which is best, particularly with a smaller mortgage and/or shorter fixed rate

Thrugelmir

Product fees are a commercial decision. The higher the fee. The larger the remortgage balance lenders are targeting their business at.

So it's a balance on a case by case basis if paying a fee is worthwhile or not. Over time your mortgage balance will reduce so you need to end up with a lender that offers competitive rates. To avoid all the other costs of involved remortgaging which do mount up. .

vikkiew

flashg67 wrote: »

Depends on the lender I think. My last lender, Nationwide, had both with or without fee 'offers' for existing (and new) customers. The rate was slightly higher with no fee, so it does take some maths to work out which is best, particularly with a smaller mortgage and/or shorter fixed rate

Nationwide is one I am considering actually. Most have rates with and without the product fee for new mortgages, Nationwide shows it also for any other (switch or new customer). So if I take a mortage with Nationwide on a 2 year deal to get the best rate after 2 years I have to pay another 999?

What is making little sense to me is it is 999 whether a 2, 5 or 10 year deal. It is 999 whether a switch from SVR to another deal within Nationwide or bringing over a mortgage from another lender. Have I understood correctly? It reminds of London agency fees but I am not bother about fairness or logic of it all, I just want to understand the procedure.

vikkiew

Thrugelmir wrote: »

Product fees are a commercial decision. The higher the fee. The larger the remortgage balance lenders are targeting their business at.

So it's a balance on a case by case basis if paying a fee is worthwhile or not. Over time your mortgage balance will reduce so you need to end up with a lender that offers competitive rates. To avoid all the other costs of involved remortgaging which do mount up. .

Indeed with and without this fee exists and relates to the rate. Can you please confirm I have understood correctly, even when staying with the same lender, let's say Nationwide, I would have to pay this fee after each deal term. I gave more detail on my previous reply. Cheers

getmore4less

vikkiew wrote: »

Nationwide is one I am considering actually. Most have rates with and without the product fee for new mortgages, Nationwide shows it also for any other (switch or new customer). So if I take a mortage with Nationwide on a 2 year deal to get the best rate after 2 years I have to pay another 999?

What is making little sense to me is it is 999 whether a 2, 5 or 10 year deal. It is 999 whether a switch from SVR to another deal within Nationwide or bringing over a mortgage from another lender. Have I understood correctly? It reminds of London agency fees but I am not bother about fairness or logic of it all, I just want to understand the procedure.

no you don't if there is a no fee option that may be the best deal.

you have to run the number depending on the size of the mortgage the fee MAY be the best deals for others it MAY be the no fee

I think where you may be going wrong is thinking the best deal is based on the rate it is not.

I saw a one recently where the best deal was with a fee for any mortgage over £35k often it will be much higher and another I looked at no fee option was the best deal on mortgages under £180k.

AnotherJoe

You have to do the maths for each case, they are all different.

vikkiew

The cheapest overall is usually the one with fee. I would have said always but perhaps there is an exception. I thought this deal was linked to a first time mortgage due additional work involved for the lender. It is just a part of the equation. It is almost always to pay this fee upfront rather than spread it into the rate. Disappointing but now I know.

getmore4less

vikkiew wrote: »

The cheapest overall is usually the one with fee. I would have said always but perhaps there is an exception. I thought this deal was linked to a first time mortgage due additional work involved for the lender. It is just a part of the equation. It is almost always to pay this fee upfront rather than spread it into the rate. Disappointing but now I know.

It depend on how much you borrow which is the cheapest overall.

Paying upfront is better is nonsense.
When you do the numbers properly it makes no difference.
Often the better option to add to the loan for other reasons.

amnblog

Does anyone know why Lenders charge product fees?


Top prize for the poster who knows the accurate reason.

getmore4less

Because they can

The primary benefit to the lender is a bit of early cash flow.