"Product Arrangement Fee" for changing mortgages

scw1

Hi,

We are about to change our mortgage from Abbey to Halifax for a better deal and are being charged £999 product arrangement fee. Any ideas if we have to pay it? What its for? Is this the norm?

Thanks in advance

Sam

cazziebo

I asked that question here once...

jeez was I sorry! :rotfl:

scw1

Why were you sorry?

dwsjarcmcd

Yes it's the norm, it subsidises the rate, if you want the product you need to pay it, if you don't want to pay it find another product that has a higher rate but a lower fee- your choice.

This question has been asked dozens of times, try a search

homer_j_3

cazziebo wrote: »

I asked that question here once...

jeez was I sorry! :rotfl:

did u ask if it was the norm or did you ask if you could claim it back?:D

Dan_Collins_2

You dont have to pay it, you can get a higher rate.

Let us know the rate and product and we may be able to help.

dunstonh

Any ideas if we have to pay it?

No you dont. In the same way you dont have to pay £77,000 for an Audi R8. You can pay £10,000 for Nissan Micra instead.

What its for?

To pay for the bank obtaining the funds to be able to offer that rate. In cases of the very low rates, the only profit to the bank may be in the arrangement fee as well (typically the higher arrangement fee/lower interest rate versions).

Is this the norm?

For about 20 years, yes.

You are buying a retail product and the fee for this product is £999. If you dont want to pay that much then buy a different retail product. Thats all it boils down to at the end of the day.

ManAtHome

If they worked on the same principle as a (non-Carlsberg) nightclub, they'd be charging you an arrangement fee and an interest rate 1% above everyone else...

Is the Halifax still a better deal over the period when you include the fee (and extra interest if they bundle it in, or loss of interest if they don't) - if not, stay where you are.

ps. - don't ask if the fee is illegal.! (that wasn't you Cazzie?).

mitchaa

scw1 wrote: »

Hi,

We are about to change our mortgage from Abbey to Halifax for a better deal and are being charged £999 product arrangement fee. Any ideas if we have to pay it? What its for? Is this the norm?

Thanks in advance

Sam

Have you ever thought to yourself why there are some mortgages on offer at lower than the bank of England base rate.

BOE rate currently at 5.25% but some mortgages on offer are lower than this at 4.79%

Now why would this happen, the lender is going to lose money:rolleyes:

Basically you're buying an interest rate. You dont want to pay the fee, you get a higher rate.

Simple as, doesn't take the brains of Albert to work out either;)

tanikk£

Quick question about Halifax product fee - at what point the fee is payable ?

We've got a mortgage offer, but as it looks now, we will have no chance to use it (the purchase fails and we are buying nothing else), do we still have to pay that fee ? It is particularly Halifax's fault that the purchase is going to fail (took them more than a month to process our application, seller changed his mind) ..any advice appreciated.

Dan_Collins_2

mitchaa wrote: »

Have you ever thought to yourself why there are some mortgages on offer at lower than the bank of England base rate.

BOE rate currently at 5.25% but some mortgages on offer are lower than this at 4.79%

Now why would this happen, the lender is going to lose money:rolleyes:

Basically you're buying an interest rate. You dont want to pay the fee, you get a higher rate.

Simple as, doesn't take the brains of Albert to work out either;)

Lenders are buying 2-3 year money at way below the base rate still, they are building up profit while the market is not being flooded with great products. As ever when one party lose another wins!