Written by Karen Bryan
I believe that mortgage arrangement fees (a.k.a booking or admin fees) should be banned, or at a minimum capped at a realistic amount. I’ve seen some mortgage arrangement fees of several thousand pounds. In my opinion, the cost associated with setting up a mortgage should be factored into the interest rate.
The last time we applied for a mortgage, which is around 10 years ago, the average mortgage arrangement fee was around £200. I can’t see any justification for fees having leapt into thousands of pounds.
In my opinion, it’s just a way for financial institutions to increase their profits and make their headline rate of interest look lower so that they come higher in best buy mortgage tables.
Mortgage arrangement fees make it more complicated to work out the best deal. Whereas it they didn’t exist, it would be much easier to compare the offerings from various financial institutions.
There’s often an option to add the fee to your mortgage, which means that you will pay interest on the fee for years.
There’s also the possibility that if the property purchase falls through, you may not get a refund of the mortgage arrangement fee.