What is a Mortgage arrangement fee?
By
HuutiMoney
What is a mortgage arrangement fee?
A mortgage arrangement fee as the name indicates is a fee for arranging a mortgage.
When you receive a mortgage offer you will usually have to then pay a mortgage arrangement fee to the lender. It covers most of the admin work related to setting up the mortgage for you.
Mortgage arrangement fees are not fixed amongst mortgage lenders and can differ between all mortgage lenders.
If the mortgage arrangement fee is a significant issue for you then you could ask your mortgage broker to check and see what the mortgage arrangement fee is with each mortgage lender you may be able to get a mortgage from.
Mortgage arrangement fees could cost a percentile of the mortgage. Maybe 0.45% but in some cases even up to 1% or more of the mortgage but these are usually with commercial mortgages and mortgages for investment properties and not residential mortgages.
For residential mortgages, the mortgage arrangement fee could also be a percentile of the mortgage but may usually range between a few hundred pounds to about two thousand pounds based on the size of the mortgage.
You may be able to add the mortgage arrangement fee to your mortgage and repay it over the term of your mortgage but this may cost you significantly more as you are paying it over such a long period of time and being charged an annual interest rate every year.
Some mortgage lenders will offer low rates but charge high mortgage arrangement fees so watch out for those.
Under the Consumer Credit Act 1974, an Arrangement Fee must be quoted in your written offer of credit (in the case of mortgages the key facts illustration document and in your Credit Agreement. Not all lenders charge an Arrangement Fee.
Mortgage arrangement fees may also be known as booking fees or completion fees.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.
