Do some lenders charge a product fee when switching to a new deal?

JackeeBoy

My mortgage is up in January and I went through a comparison website and got an offer from NatWest and my current mortgage is with TSB. TSB offered me a new deal which is slightly more expensive than the NatWest offer but as I don't have to pay an arrangement fee, the difference is like £200 over 5 years in regards to overall cost. Also, the other benefit is I don't have to add the arrangement fee on my loan or pay it up front.

My broker is insisting that TSB will in fact charge me a fee for switching to a new deal. I'm not saying I'm an expert but I do have a financial background and haven't heard of this before from a mainstream lender. Is there something I'm missing?

ACG

I am with Virgin, I switched to a new product with them earlier this year and they added a £999 fee to the balance. It is not uncommon.

[Deleted User]

Depends on the deals on offer. They will either offer a higher rate with no fee, or a better rate with a fee. Just need to do some sums.

Maybe the broker can't see the deal you've been offered as it's internal to tsb

kingstreet

Remember to take into account the remaining balance at the end of the initial period, not just the monthly payments and fees.

stu2500

The NatWest product I have just switched to was £995 (added to the balance). You generally have the choice, but the rate without the fee was appalling.

Moneyhelp4u

TSB should state clearly in their communication to you about a product fee. What did they send to you?

Thrugelmir

stu2500 wrote: »

The NatWest product I have just switched to was £995 (added to the balance). You generally have the choice, but the rate without the fee was appalling.

Product fees are set to attract those borrowers with higher mortgage balances.