Jump to content
House Price Crash Forum
Sign in to follow this  
sosos

Arrangement Fee Of £4350 - Is This A Record/normal?

Recommended Posts

Helping my son to buy a house for him and his fiancee, and during my research I have now subscribed to a forum called House Price Crash. My, do I feel confident about my money now...

So my son and I got quoted on one offer which included an arrangement fee of over £4000!! It's a good offer but I have never come across an arrangement fee higher than £700. The broker justified the fee saying that it's a buy-to-let mortgage. This is is fine because my son is not getting married till Autumn 2007 and the house we've put an offer in has tenants till next summer.

- Are arrangement fees non-negotiable?

- Is the broker exploiting me?

- Is there a legal cap on arrangement fees?

Anyone have views or comments to share on this matter please, would be kindly appreciated.

Sam

Share this post


Link to post
Share on other sites

Helping my son to buy a house for him and his fiancee, and during my research I have now subscribed to a forum called House Price Crash. My, do I feel confident about my money now...

So my son and I got quoted on one offer which included an arrangement fee of over £4000!! It's a good offer but I have never come across an arrangement fee higher than £700. The broker justified the fee saying that it's a buy-to-let mortgage. This is is fine because my son is not getting married till Autumn 2007 and the house we've put an offer in has tenants till next summer.

- Are arrangement fees non-negotiable?

- Is the broker exploiting me?

- Is there a legal cap on arrangement fees?

Anyone have views or comments to share on this matter please, would be kindly appreciated.

Sam

The broker is almost certainly getting a cut of the arrangement fee. Getting some of that cut back is definitely negotiable! I get the impression that arrangement fees can be negotiable, but it will depend on the bank in question.

I doubt there's any legal cap on arrangement fees. Frankly, 4000 UKP sounds extremely high however.

cheers, Phil

Share this post


Link to post
Share on other sites

Helping my son to buy a house for him and his fiancee, and during my research I have now subscribed to a forum called House Price Crash. My, do I feel confident about my money now...

So my son and I got quoted on one offer which included an arrangement fee of over £4000!! It's a good offer but I have never come across an arrangement fee higher than £700. The broker justified the fee saying that it's a buy-to-let mortgage. This is is fine because my son is not getting married till Autumn 2007 and the house we've put an offer in has tenants till next summer.

- Are arrangement fees non-negotiable?

- Is the broker exploiting me?

- Is there a legal cap on arrangement fees?

Anyone have views or comments to share on this matter please, would be kindly appreciated.

Sam

So let me get this right? - You're buying a house at today's market rate to move in next summer?

I would say that's rather risky. As for your arrangement fee, that should give you some hint of where things are going with the whole industry at the moment.

It's a ripoff, but then probably so is the house. - your seller has a fantastic deal.

Affordability has reached a celing (obviously so or you wouldn't need to be helping your son buy) so prices can't rise any higher (other than inflation), and your seller gets top rate and rental income until next year.

sorry to be harsh, but it's a lot kinder than some replies you'll get on here!

Incidently, as you're new to this game have you looked at nethouseprices.com to look at what the house was bought for? (if after 2000)

Edited by Beaker

Share this post


Link to post
Share on other sites

It sounds the level of fee you'd expect to pay on one of these companys that advertise on the telly for customers.

I'd shop around.

Buying a house for your son and fiance. How kind. I assume you mean you're going to become a landlord rather than just giving them a house.

TBH if they need your help to buy then it says a lot about the market.

Share this post


Link to post
Share on other sites

hi sam....i assume you are getting a discounted price because of the tenants. why is the landlord selling the house if it still tenanted? has your solicitor looked at the tenancy agreement yet? most are now short term 6 month contracts...

remember there will be early redemption clauses if your son and his fiancee want to swop to an owner occupier mortgage next year.

why not wait a year and buy then if you still want to.

i know they will be disappointed ...it must seem "like a dream come true" to them but it could turn into a nightmare.

wait a year...there will be other houses, and they will probably be cheaper.

ellenmyfanwy

Share this post


Link to post
Share on other sites

Thank you for the responses, didn't expect such swiftness! Any comment is constructive, no matter how tough it sounds (Beaker!)

To put it in perspective, the house is worth £400k. My son and I have been putting money aside for years, so with deposit paid, the mortgage is about £280k. The same house sold in Summer 2003 for £360k.

The KeyFacts shows that by the end of the term, £1.84 is paid for every £1.00

The house they're buying, (unfortunately!) is oh so perfect for them. It's in a nice little neighbourshood right next to a Chinese school (my future daughter-in-law being Chinese, they would like any kids to go there).

Regarding the more-than-one comment about it would be worthing waiting till next year. Obviously the name of this forum shows that there is a bias as to house trends, but my son and I have been stalling forever - Surely the bullet has to be bitten at some stage otherwise where will it end... to me it's just a stress that has to be endured.

Share this post


Link to post
Share on other sites

Thank you for the responses, didn't expect such swiftness! Any comment is constructive, no matter how tough it sounds (Beaker!)

To put it in perspective, the house is worth £400k. My son and I have been putting money aside for years, so with deposit paid, the mortgage is about £280k. The same house sold in Summer 2003 for £360k.

The KeyFacts shows that by the end of the term, £1.84 is paid for every £1.00

The house they're buying, (unfortunately!) is oh so perfect for them. It's in a nice little neighbourshood right next to a Chinese school (my future daughter-in-law being Chinese, they would like any kids to go there).

Regarding the more-than-one comment about it would be worthing waiting till next year. Obviously the name of this forum shows that there is a bias as to house trends, but my son and I have been stalling forever - Surely the bullet has to be bitten at some stage otherwise where will it end... to me it's just a stress that has to be endured.

right... you are obviously not a serious poster.

bite that bullet + endure losing £120K.. or wait and see..DUH!

Share this post


Link to post
Share on other sites

Some mortgage providers are charging arrangement fees as a percentage of the mortgage. This helps them lower the interest rate to appear more competitive. This is particularly the case for fixed rate or introductory offer mortgages.

Try adding the fee to the interest rate during the redemption penalty or fixed period to see if the loan is competitive. E.g. £4000 is 1.43% of £280,000. If the redemption penalty/fixed period is 2 years, then add about 0.7% to the interest rate.

If it was me, I'd be insisting on fee transparency when dealing with a broker or mortgage company. Also, money saving expert have recommendations for on-line brokers with decent mortgage search tools and fee rebates. Check out the best deal there.

Good luck, and welcome to the biggest pyramid scheme in history,

T&T

Share this post


Link to post
Share on other sites

Regarding the more-than-one comment about it would be worthing waiting till next year. Obviously the name of this forum shows that there is a bias as to house trends, but my son and I have been stalling forever - Surely the bullet has to be bitten at some stage otherwise where will it end... to me it's just a stress that has to be endured.

Why not get you son to buy the house, with you as a guarantor if necessary?

IMO this is a better bet than you buying it as a BTL, unless you have a compelling reason for the preperty to be in your own name.

Share this post


Link to post
Share on other sites

Helping my son to buy a house for him and his fiancee, and during my research I have now subscribed to a forum called House Price Crash. My, do I feel confident about my money now...

So my son and I got quoted on one offer which included an arrangement fee of over £4000!! It's a good offer but I have never come across an arrangement fee higher than £700. The broker justified the fee saying that it's a buy-to-let mortgage. This is is fine because my son is not getting married till Autumn 2007 and the house we've put an offer in has tenants till next summer.

- Are arrangement fees non-negotiable?

- Is the broker exploiting me?

- Is there a legal cap on arrangement fees?

Anyone have views or comments to share on this matter please, would be kindly appreciated.

Sam

Speaking as a person who has quite a few mortgages and also has got them through a mortgage broker, tread very carefully here as you sound like you're being ripped off.

There is no reason to pay that fee as a brokers arrangement fee. This is 100% negotiable and depending on your credit status, you should be able to negotiate a 0% brokers fee. I get my mortgages through Chase de Vere and they charge me NO broker fee as I told them it'd be zero or no business from me & they agreed without much complaint. The only time you couldn't negotiate this, is when they're going to have to bend over backwards for you to get the loan because you have a bad credit history.

There are even brokers that pay you for getting the mortgage through them.

However, having said all of that, is this actually a bank arrangement fee? Some mortgage providers offer an amazing interest rate, but then charge an arrangement fee. These aren't usually negotiable because the lender has incorporated the fee into the product and therefore the product & the fee go hand-in-hand.

So if it's a broker fee, ditch the broker, please don't tell us you already paid for a valuation etc through the broker, that would just mean that you didn't check the full price structure when you approached the broker. This world is full of sharks, but there's plenty of shark food out there too. Once you've paid for anything or filled in any forms, they know their hand is stronger because you've started committing yourself to the deal. It's like putting a deposit on a product over the phone, then trying to negotiate a better price when picking it up. Always negotiate first & transact 2nd.

If it's a lender fee, decide whether the product is still the best value when you include the fee. If the interest rate is extremely low for example, then the fee might still be worth paying as long as the fee is earned back in savings within a few years as you might want to change mortgages and might end up regretting having paid the fee in that case.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.