Arrangement fee - should I wait/shop around?

AliceBanned

Hi all

I've posted before on my mortage search so I apologise if you have already given me advice and I'm still undecided!

I'm a first time buyer looking to borrow 71.5k on a right to buy property worth around 90-100k at present, in a fair condition so could be worth more if I do it up. I'm in a fairly good job but only started two months ago, but have past ccj four years ago which throws a huge spanner in the works but means I can't be too fussy, especially in the current market.

Best offer I have at present is 6.63% fixed for 3 years, (22 year term) which I am happy with, but fees payable to the broker are £2.5k (Completion Fee), plus £995 packaging fee, £700 my legal costs £295 application fee, and £995 arrangement fee! All this seems a bit steep but I'm paying rent of 3.5k a year otherwise (not too steep I know!), and as I can reduce the term the overall cost is less than other initial offers I've had at higher interest.

Should I wait and shop around? Been doing that since September (partly because I changed jobs - C&G had made me an offer but pulled out when I suddenly changed jobs - understandably!

Any opinions would be very helpful. I'm indecisive at the best of times! Also my offer notice from the council dates back to September (71.5k with discount, valuation from them 85k for a one bed flat, which was lower than my independent valuer at 95k). maybe price would reduce but I'm not sure, knowing this particular council!

Thanks for any help!

minimike2

Is the £2.5k the brokers own fee then?

Thats is scandalous - 3.5% of the loan amount!!!!

Find another broker who will do it cheaper. The absoloute MAX you should pay is 2.5%, but you should be able to get someone to do it for 1% or less - or even better a fee-free broker.

Dont be conned into paying that much. Challenge the broker and ask him/her to reduce thier fee to £715 as you do not believe the amount they are charging is fair.

AliceBanned

minimike2 wrote: »

Is the £2.5k the brokers own fee then?

Thats is scandalous - 3.5% of the loan amount!!!!

Find another broker who will do it cheaper. The absoloute MAX you should pay is 2.5%, but you should be able to get someone to do it for 1% or less - or even better a fee-free broker.

Dont be conned into paying that much. Challenge the broker and ask him/her to reduce thier fee to £715 as you do not believe the amount they are charging is fair.

Yes that is their fee - thanks for this. I will try and get them to reduce it, or just refuse to go ahead. To be fair on them, they have not been pushy at all, and have even suggested I use them only as a last resort, as they know I previously had a high street lender offer with Abbey, which wasn't a firm offer and didn't materialise. They have been very courteous which I know isn't everything but at least I don't feel pushed into things; I have found another broker a bit unfair in the past in his approach - a bit hard sell but for those of stuck in "bad credit" unfortunately we have far less choice.

Will keep you updated; just going to email them and see if I can get it reduced. it all goes on to the loan so it's quite a few thousand; of course someone with poor credit rating is more likely to turn a blind eye to this perhaps; ie it is a debt mentality.

minimike2

Well thats something good to hear, but 3.5% of the loan amount is still hugely excessive, when they wont have access to anything different to a broker that will charge less (or nothing).

dunstonh

They are charging more for arranging a mortgage than a higher qualified investment specialist adviser building a portfolio of the same amount. 2.5% is a disgraceful amount.

AliceBanned

dunstonh wrote: »

They are charging more for arranging a mortgage than a higher qualified investment specialist adviser building a portfolio of the same amount. 2.5% is a disgraceful amount.

Thanks for the advice. I'm definitely not going for it unless I get a big reduction, and I've emailed to let them know, so I'll let you know what response I get. Looks like I need to be patient and shop around. When I think about it, I wouldn't go out and spend that kind of money on an item without giving it a second thought, so I shouldn't do it to arrange a mortgage.

AliceBanned

Well surprise surprise, they said no! The broker fee is "fixed and non-negotiable", although they haven't responded to my request as to what it is for.

I've asked for the figures without the fee, and to be honest it isn't a huge difference in interest - about £5,000 onto the whole loan. Or is this huge?! I know I've been stupid with money in the past and been ripped off by credit card companies so I want to make sure i've learned my lesson.

My common sense tells me I can get a better deal in a few months' time, but of course there is no guarantee of this either, but on principle I'm not too happy with being charged £2.5k for a bit of emailiing and photocopying which I am quite happy to do myself!

Any comments welcome as I still have not turned them down yet - it is also a big decision to drop out of the right to buy altogether and wait longer.

dunstonh

If you prefer fee based (with commission rebated) then go to a proper fee based adviser and not one using a defaqto commission rate.

minimike2

You should still be able to get exactly the same mortgage product through someone else!!!!

Find another broker who doesnt charge fees that high.

To be honest, I would never have the balls to ask someone for a fee of that size and even if I did I would feel guilty straight away and give some of it back. My fees have never even gone into 4 digits!

AliceBanned

minimike2 wrote: »

You should still be able to get exactly the same mortgage product through someone else!!!!

Find another broker who doesnt charge fees that high.

To be honest, I would never have the balls to ask someone for a fee of that size and even if I did I would feel guilty straight away and give some of it back. My fees have never even gone into 4 digits!

Thanks - I'm not having much luck at present, and now have quite a few searches on my record. The broker said that he got me an "exception". Someone else advised me not to go to too many brokers - I've been to three overall, though not at the same time. How many should I go to? Just keep trying? Won't this affect my credit rating?

thanks

minimike2

Have you got the KFI for the product.

If you can give us the details of the product we should be able to tell you if it is freeley available to you.

An "exception" sounds a bit funny to me to be honest.