Mortgage Arrangement Fees?

[~ vortex ~]

Im looking for a new mortgage and I've noticed that some lenders charge an "Arrangement Fee". What is this exactly? and how can some lenders justify it being as much as �2000 in some cases? Does it really cost them that much in administration or is it just another way of making excessive profits?

[dzug]

What it costs and what they charge need bear no relation to each other and there is no requirement to justify it.

The only exception is that it is unlawful to charge an excessive penalty fee for breaking a contract.

With these high fees there is usually a low-interest mortgage involved out of which they won't make much until after the low interest period has ended.

[chitchat]

You would be surprise how little a lender will make on mortgage when it is on a completitive rate. Its one way of increasing that small profit. But �2000 does seem very expensive. Try looking around - even paying a higher rate maybe cheaper overall than paying �2000 for admin fees.

[birdwoman]

Yorkshire Building Society are advertising that they are doing fee free mortgages - may be worth looking into.

http://www.myfinances.co.uk/mortgages/news/com panies/yorkshire-building-society/yorkshire-bu ilding-society-launches-no-fees-mortgages-$471 695.htm