Mortgage Fee Question

grimmers69

Hi

My fixed rate is up very soon and Natwest (who I have my Mortgage with) is offering a new fixed rate for 2yrs which is going to cost me an extra £50/mth plus an arrangement fee of £999! How can the bank I already have my mortgage with, charge so much to arrange a similar deal? Can I claim it back?
What can I do? Help!

dunstonh

FAQ...

How can the bank I already have my mortgage with, charge so much to arrange a similar deal?

They are not charging you a penny to remain with them. They are charging you because you are buying a new product.

I apologise to the regulars who are bored with this subject as its the same response as per usual...

If you buy a TV, do you expect Currys to replace it with a brand new one every 2-3 years without charging you for it?

Can I claim it back?

When you buy a loaf of bread one week, does that mean your supermarket has to supply you with bread free of charge for the rest of your life? Of course you cannot claim it back. It is a valid retail charge for a retail product that you are choosing to buy. If you dont like it, you dont buy it.

To give a fixed rate mortgage, the lender has to secure finance or terms to allow them to offer that fixed rate. That comes with risk and cost. Indeed, you just have to look at Northern Rock to see how great that risk was as virtually all their lending was arranged that way. There is very little or no money made on the interest of the fixed rate. The fee represents where the profit is made.

Rick62

If you don't want to pay for it then don't take it. Simple

Jonbvn

This is the problem with all these 2-year fixes that have proven so popular.
Most borrowers seem to look at the headline rates within the 2-year fix, without considering what happens after the 2 years. At the end of the 2-year period, everyone looks to remortgage, to avoid the SVR mortgages. This costs money.

Everyone should consider the overall cost of their mortgage, including fees and charges over it's lifetime, not just in the initial years.

dunstonh

totally agree Jonbvn. 5 year fixes can often be the most cost effective option as you are buying a new fixed rate every other year.

2 year fixes are too short to make them cost effective for the typical mortgage.