Arrangement fees - Halifax

Noz

eldowardo wrote: »

I cant help but notice that the people saying arrangement fees are necessary are people in the trade, their signatures give them away

to the regular person in the street they are another way of making money by the banks - they are disproportionate - I dont believe any member of the public is happy about paying them, even if they have a £50k mortgage or a £500k one.

Eldowardo, I'm not in trade in any shape or form but if a consumer is not happy to purchase a mortgage deal which has an arrangement fee then don't buy it, buy one that suits their own needs.

It has been explained in detail in this thread and others that these fees are not akin to bank charges and are they are not forced upon the consumer. Proportion to cost is not relevant in this context.

eldowardo

the one that suits their needs often have arrangement fees attached. for example ones with lower interest rates have a higher charge attached..

Whatever way you try flowering it up, they are penalty charges, not product costs or whatever someone called them earlier. The banks penalises you for changing to a better deal, even if it is with the same bank.

Your quite right they are not forced onto a consumer, but consumers are having to take the hit cos when they come off fixed rates they want another one, often with this fee attached.

And its not as though its just one bank doing this. All banks have mortgage deals where they have thse charges and the better the mortgage offer the higher this price is. Yep you can shop around, but only the person who started this thread and myself seems to not be happy with the charge. All the rest of you are defending it.

dont you think they make enough money from the mortgage interest without slapping a further charge on consumers.

dunstonh

Whatever way you try flowering it up, they are penalty charges, not product costs or whatever someone called them earlier.

How can a retail charge be a penalty charge?

Do you have to pay this charge? No
Is the charge only made if you purchase the product? yes

The banks penalises you for changing to a better deal, even if it is with the same bank.

And how does the bank finance that "better" deal?
Who pays for the work involved in financing it?

the one that suits their needs often have arrangement fees attached. for example ones with lower interest rates have a higher charge attached..

Oh diddums. With respect, if they cannot afford the fee then its tough. There are lots of things people cannot afford. Anyway, the ones with the larger fees are marketed with the larger mortgage in mind. If you dont fit that product then dont complain about it because plenty out there do fit it and prefer to pay the larger fee to get the better rate.

dont you think they make enough money from the mortgage interest without slapping a further charge on consumers.

Many fixed rates dont make a penny on interest itself. Indeed, some are loss leaders. Of course, you would know that if you had read the thread.

Noz

eldowardo wrote: »

the one that suits their needs often have arrangement fees attached. for example ones with lower interest rates have a higher charge attached..

and if the fee is a stumbling block then it doesn't suit their needs.

eldowardo wrote: »

Whatever way you try flowering it up, they are penalty charges, not product costs or whatever someone called them earlier. The banks penalises you for changing to a better deal, even if it is with the same bank.

Again, the consumer can then shop around for a deal that suit their needs. If one of the needs is a deal with no arrangement fee then look at those deals.

eldowardo wrote: »

Your quite right they are not forced onto a consumer, but consumers are having to take the hit cos when they come off fixed rates they want another one, often with this fee attached.

Again, the consumer can choose between paying a fee and not, it's the whole package that needs to be evaluated not only the interest rate.

eldowardo wrote: »

And its not as though its just one bank doing this. All banks have mortgage deals where they have thse charges and the better the mortgage offer the higher this price is. Yep you can shop around, but only the person who started this thread and myself seems to not be happy with the charge. All the rest of you are defending it.

Because I disagree with the reasons you have stated, and it has been explained in detail previously.

eldowardo wrote: »

dont you think they make enough money from the mortgage interest without slapping a further charge on consumers.

Lenders don't necessarily make profit from mortgage interest.

eldowardo

if someone moved from one, let say electricity supplier to another cos the other is cheaper, and you are charged 50quid to leave, youd say that was a penalty charge wouldnt you. thats the same with a mortgage.

intrest is the profit on a mortgage. if you take a 100k mortgage, are you saying the interest over the 25 years doesnt make a profit! what about early repayment charges? they charge them to offset some of the interest they will miss out on. how do you think banks stay in business.

I do not believe that that fee helps finance the deal 100%. The bank will make a cut from the fee in some way.

and what thread are you referring to?

dunstonh

if someone moved from one, let say electricity supplier to another cos the other is cheaper, and you are charged 50quid to leave, youd say that was a penalty charge wouldnt you. thats the same with a mortgage.

You are not comparing like for like. The arrangement fee is PURCHASE charge. Not an exit penalty charge.

intrest is the profit on a mortgage. if you take a 100k mortgage, are you saying the interest over the 25 years doesnt make a profit!

You havent read this thread at all have you (or the main one that is mentioned in this thread).

Interest is not the profit. Banks do not print money to lend to you. They have to obtain the money from investors and those investors have to be paid. This is described on the other thread

what about early repayment charges? they charge them to offset some of the interest they will miss out on.

Exactly. If you dont pay for breaking the contact who instead is going to pay the investors that have a contract with the bank. The bank either has to keep paying the investors or break the contract and pay a fee themselves.

I do not believe that that fee helps finance the deal 100%. The bank will make a cut from the fee in some way.

Doesnt really matter what you believe. The three parties involved in lending money on fixed rate want to make a profit. You the borrower want a cheaper rate that you profit from. The bank as retailer wants a profit from what they retail. The investors that finance the lending on fixed rate want to profit on their investment (which can actually go full circle as some of these investments can be in your ISAs and pensions).

and what thread are you referring to?

Its mentioned in post #11
http://forums.moneysavingexpert.com/showthread.html?t=623965

MortgagesInc

Exactly what I was just typing dunstonh - couldn't agree more.

Eldowardo - you need to understand that banks are businesses - they are there to make a profit. They havea margin that they choose to make on their lending, and can do this either on the rate or by charging a fee - most fixed rate options will work out very similar over the fixed rate term for an 'average' mortgage

KTF

Eldowardo: You also need to consider the whole costs (i.e. fee + interest rate) when comparing the deals as ones with the low rate and high fee may cost more over the term for some people than if they went for one with a lower fee and a higher rate so paying a high fee for a lower rate may not be the best option.