Harry Monk Posted February 5, 2009 Share Posted February 5, 2009 Why would you have to pay someone six or seven hundred pounds to buy something from them? I completely fail to understand mortgage arrangement fees, can someone explain it to me? Quote Link to comment Share on other sites More sharing options...
moneyfornothing Posted February 5, 2009 Share Posted February 5, 2009 its what pays for the bonuses and the bubbly .. remember the nationwide ad ? Quote Link to comment Share on other sites More sharing options...
Fortunate Son Posted February 5, 2009 Share Posted February 5, 2009 Fool some mug into thinking they are getting a good deal, then nail them up the keishter with the arrangement fee Quote Link to comment Share on other sites More sharing options...
Soldup&movedBKK Posted February 5, 2009 Share Posted February 5, 2009 Its a con........but sometimes worth paying for the security of a fixed deal...although not so much now but when they were only a hundred quid or so Quote Link to comment Share on other sites More sharing options...
R K Posted February 5, 2009 Share Posted February 5, 2009 Coz them marketing boys are dead smart and them punters are dead stupid. Quote Link to comment Share on other sites More sharing options...
Papitogrande Posted February 5, 2009 Share Posted February 5, 2009 Why would you have to pay someone six or seven hundred pounds to buy something from them?I completely fail to understand mortgage arrangement fees, can someone explain it to me? The reason you would pay is that over the life cycle of the mortgage it is cheaper to pay a high fee for a low rate. I understand how some people would see it as a con. What is definitely a bit dodgy is that the fees can usually be added to the loan, no small change when they may be 2.5% of the loan and you add 25 years worth of interest on. Quote Link to comment Share on other sites More sharing options...
tinker Posted February 5, 2009 Share Posted February 5, 2009 Why would you have to pay someone six or seven hundred pounds to buy something from them?I completely fail to understand mortgage arrangement fees, can someone explain it to me? It's a con, Harry. Money for old rope. If people said no, they would have to think again. Quote Link to comment Share on other sites More sharing options...
Winston Wolf Posted February 5, 2009 Share Posted February 5, 2009 It's a con, Harry. Money for old rope. If people said no, they would have to think again. How is it a con? You actually know youre going to pay it, it isnt like its hidden or anything. With things like that it all goes to making a profit, if i wasnt there you'd pay it in some otherway. Quote Link to comment Share on other sites More sharing options...
Papitogrande Posted February 5, 2009 Share Posted February 5, 2009 It's a con, Harry. Money for old rope. If people said no, they would have to think again. And what they would think is "higher rate" Quote Link to comment Share on other sites More sharing options...
wild card Posted February 5, 2009 Share Posted February 5, 2009 six or seven hundred? Thats cheap. Some of the arrangement fees are thousands of pounds. Doesn't make it right tho, Before the boom started these fees were 1-3 hundred for a fixed rate and sometimes free for trackers. Quote Link to comment Share on other sites More sharing options...
Nelly Posted February 5, 2009 Share Posted February 5, 2009 I remember one was 2 grand, but they add it to the mortgage, so the mongs dont really feel it.. Which of course ends up as 4 grand with the interest Banks are cleaver, some say they are so cleaver that they could run their business into the ground and get the government to bail them out, with tax payers money (without a referendum) and then award themselves bonuses. But I cant really see that happeneing....can you Quote Link to comment Share on other sites More sharing options...
wild card Posted February 5, 2009 Share Posted February 5, 2009 Banks are cleaver, some say they are so cleaver that they could run their business into the ground and get the government to bail them out, with tax payers money (without a referendum) and then award themselves bonuses Nelly, you have a wild imagination. Something so outrageous could never happen. You should make movies. Quote Link to comment Share on other sites More sharing options...
Flatdog Posted February 5, 2009 Share Posted February 5, 2009 (edited) It's a con, Harry. Money for old rope. If people said no, they would have to think again. It is a rip-off..not a confidence trick...and a rip-off which is allowed to continue because all banks/moneylenders/thieves agree to make and mask the scam as something justifiable. EDIT: Nope...you were correct Tinker...it is a con! Edited February 5, 2009 by confused.don Quote Link to comment Share on other sites More sharing options...
darwin Posted February 6, 2009 Share Posted February 6, 2009 They do it because they can. No other reason. Quote Link to comment Share on other sites More sharing options...
givemethegun Posted February 6, 2009 Share Posted February 6, 2009 They do it because they can.No other reason. Why dont they just tell it like it is on the application 'Do you want to get fk'd now, or get fk'd later?' Quote Link to comment Share on other sites More sharing options...
BXLONDONMAN Posted February 6, 2009 Share Posted February 6, 2009 (edited) Fool some mug into thinking they are getting a good deal, then nail them up the keishter with the arrangement fee do you have to make it sound so painful !! Edited February 6, 2009 by BXLONDONMAN Quote Link to comment Share on other sites More sharing options...
Mr Nice Posted February 6, 2009 Share Posted February 6, 2009 (edited) in theory it isn't really a scam at all, and can be good for you if the circumstances are right. if you know for sure that you will be staying in the place for a long period of time, it can be worth paying an arrangement fee to get a lower fixed rate. it just takes a bit of math and some solid guesses about the future. the banks really do have to make a profit, so it's usually either higher rates, or a bigger arrangement fee. since the people at large are happier having the fee tacked on to the mortgage, that's what's usually done. Edited February 6, 2009 by Mr Nice Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted February 6, 2009 Share Posted February 6, 2009 its a marketing thing. remember cheap mail order PCs.....yes you'd get your 468DX processor...but Tiny used to sell them with a mezzanine board attached to a 386SX motherboard, and people brought them into the shop when Tiny failed to do anything about the reliability, and people used to wonder at the speed of our demo machine, which outperformed all their own "top of the range" Pcs bought cheaply from Mail order, yet ( and I refer to some years ago, our 486SX33 PC would outperform all the cheap new Pentiums)/ the reason being the whole PC is a chain of components, so pop the headline as the processor, put crap in the rest of the chain. This reduced the headline cost. Its the package they see on the advert that sucks them in.... so in the case of mortgages, they see the Headline 2.99% Interest rate, and its that they remember when they are paying the monthlys, but the bank has their fee UP FRONT, so making the total cost for the two year deal or whatever higher, and yet the bank is also earning interest on the fee YOU paid upfront, rather than you. Quote Link to comment Share on other sites More sharing options...
babesagainstmachines Posted February 6, 2009 Share Posted February 6, 2009 (edited) My camera phone has 10 million pixels!!! So it obviously takes pictures almost twice as good as my 6 megapixel SLR. I think sometimes we give sheeple credit for too much intelligence. Edited February 6, 2009 by dazednconfused Quote Link to comment Share on other sites More sharing options...
VeryMeanReversion Posted February 6, 2009 Share Posted February 6, 2009 Mortgage arrangement fees serve two purposes: 1. Immediate, recordable profits for the bank to help rebuild their balance sheets. They also want you to pay it rather than add it onto the loan so it counts as reserves. (some dont let you add it to the loan, that would not count as reserves although it is effectively the same thing). 2. Tie you in. When your deal ends, you go onto whatever rate they choose or stump up more fees. As you may have noticed, this is not for your benefit. The fees are so large that I am just reducing offers to levels where I dont need a mortgage. VMR. Quote Link to comment Share on other sites More sharing options...
economicvoicedotcom Posted February 6, 2009 Share Posted February 6, 2009 A mortgage is just a financial 'product' The product maker has to make a profit on that product against what is in reality very stiff competition. If they'd actually been screwing us then they wouldn't be technically bust, would they? The profit from this type of monthly payment product comes from the continuation of those payments (obviously). But, apart from the competition, the lenders have to account for such things as the future (a total unknown as we're discovering), customers switching deals and defaults as well as deals not going through. Arrangements fees are just part of that mix. economicvoicedotcom Quote Link to comment Share on other sites More sharing options...
fluffy666 Posted February 6, 2009 Share Posted February 6, 2009 A mortgage is just a financial 'product' The product maker has to make a profit on that product against what is in reality very stiff competition. If they'd actually been screwing us then they wouldn't be technically bust, would they?The profit from this type of monthly payment product comes from the continuation of those payments (obviously). But, apart from the competition, the lenders have to account for such things as the future (a total unknown as we're discovering), customers switching deals and defaults as well as deals not going through. Arrangements fees are just part of that mix. That's fair enough, but the simple way to male it fair would be a requirement that the arrangement fee be included in the headline rate, or repayment calculations. So an example costing £1200 over 2 years would have £50 per month added to the example repayments, or the equivilent interest rate. Quote Link to comment Share on other sites More sharing options...
Mr Nice Posted February 6, 2009 Share Posted February 6, 2009 That's fair enough, but the simple way to male it fair would be a requirement that the arrangement fee be included in the headline rate, or repayment calculations. So an example costing £1200 over 2 years would have £50 per month added to the example repayments, or the equivilent interest rate. but you can do it yourself with a pencil and paper or calculator. the bank has an obligation to be open about the fees that they will be charging, but it really is up to the buyer to run the numbers and see if it works for them. not that I don't think that the banks have been a bit sly over the past several years, but they only really could do it because the buyers were so apathetic about the whole process. I would almost say that it is MORE unfair for a buyer to have read the contract, agreed to the terms, then complain a year or two later when their gamble doesn't pay off. Quote Link to comment Share on other sites More sharing options...
contractor Posted February 6, 2009 Share Posted February 6, 2009 the banks really do have to make a profit... Err, why? If banking was not for profit, then we would not be in this mess. Quote Link to comment Share on other sites More sharing options...
contractor Posted February 6, 2009 Share Posted February 6, 2009 A mortgage is just a financial 'product' The product maker has to make a profit on that product against what is in reality very stiff competition. If they'd actually been screwing us then they wouldn't be technically bust, would they?The profit from this type of monthly payment product comes from the continuation of those payments (obviously). But, apart from the competition, the lenders have to account for such things as the future (a total unknown as we're discovering), customers switching deals and defaults as well as deals not going through. Arrangements fees are just part of that mix. economicvoicedotcom Your argument doesn'h hold water. It's perfectly possible for them to screw us on the mortgage front, making juicy profits, and then spunk the money on bad investment decisions in other areas and come out as a net loss with humungous liabilities Quote Link to comment Share on other sites More sharing options...
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