Fixed Rate - arrangement fee?

Jonbvn

IHMO, fixed rates are possibly not the best product at the moment, since most experts are predicting several rate cuts over the next year. Of course, these experts maybe wrong!

Finally, dunstonh is offering you good honest advice. If you want to fix your mortgage every couple of years then you will pay a lot of upfront fees. That is the way it is, take it or leave it. There is no right or wrong about it.

As pointed out by MSE Martin the lenders (banks) are not your friends. They are businesses & they must make a profit out of their borrowers.

scottishsuz

I'm due to re-new my mortgage very soon and agree with the OP that the lending charges seem a bit steep.

But like Jonbvn said, banks are not in business to be popular, they do it to make profits. Its a question of shopping around for the best deal.

Personally I'm heading towards fixing for 5 years, but thats because my mortgage is relatively small and the high fees make quite a big difference to my own situation. Plus I like the security of knowing what is going where and when.

Suz

mistriladi_2

I spoke to NatWest yesterday and the guy agreed with me that on my balance the arrangement fee was too high and for the rate I was offered did not make sense. Apparently as you approach the end of your fixed term their marketing dept send out these type of letters and the onus is on the customer to challenge them and seek a better deal. He said they only offer 2 year fixed terms (for free) and if I wanted to fix for 5 years the arrangemt fee would be £699. Because of my balance and term left to pay he suggested 6.39% fixed for 2 years (free of charge) and my repayments increase by £30 pcm which is more acceptable. He also said when I last fixed my mortgage that too was free so I didn't pay £350 as I thought I had.

I more than anyone know banks are businessess, I used to work for Natwest for 15 years!

Thanks for all your replies.

emeraldbugle

It would have been cheaper to pay the £999 upfront.

If you were borrowing £100k over 25 years

at 5.69% + £999 the total paid over 2 years would be £16,186.44
at 6.39% the total paid over 2 years would be £17,040.00

I know which one I would have gone for

mistriladi_2

If I was borrowing £100K maybe....... my balance is less than £60K with less than 16 years remaining.

meanmachine_2

I think people have misunderstood the OP.

She/He is complaining about the product fee - and as others have pointed out, this huge fee is an attempt to offset the interest rate and get some of the bank's products into best buy tables.

As the OP has discovered, it is possible to go for cheaper ones, but the IR is higher (or rather a truer cost of what banks are now paying to borrow money themselves!)

However, surely the OP - having worked at Natwest - knows that their mortgage products are NEVER much cop.

Don't be lazy - switch!

mistriladi_2

meanmachine wrote: »

I think people have misunderstood the OP.


However, surely the OP - having worked at Natwest - knows that their mortgage products are NEVER much cop.

Don't be lazy - switch!

LOL - I should really!