Have you been stung by fees when arranging a mortgage?

Charlotte, thanks for the response. I did look at the “know the issue” site. The mission statement sort of sums up the approach:
“Two thirds of us think that companies use fees or charges to trick us into thinking that the cost is cheaper than it is. We’re calling for all financial fees and charges to be upfront, fair and easy to compare. We want companies to take action and the Government and regulator to conduct a thorough review.”

This is fine – we all want (I assume) to have total clarity in what we will be paying. What I was concerned with was that the charges that will be made are justified. I would like to see explanations for both the need tp impose and the level of these charges (or arguments to show the charges are not justified) and if we are criticising an industry, they should be asked to submit their side of the story. Then we can hopefully see whether there is a “case to answer”.

I would campaign to remove vat from household energy – it is a vital commodity like food and housing. I would expect considerable support. But, at the same time, I should be asking “and where would you like the lost tax revenue to be replaced from” (excluding “not from me” as a reply! 🙂 . In other words, we need to look at a slightly wider picture to reach a sensible conclusion, don’t we?

This has always been a bone of contention. It came up again in the Conversations about estate agents. The theory, advanced by the fee earners, is that as house prices rise the percentage fee level falls. They must think we were born yesterday to swallow that.

I wonder who had the nerve to introduce “arrangement fees” – they did not exist when I first became a mortgagor. Once the first lender was seen to get away with it the others swiftly followed, such was the inelasticity of demand at that moment. Now we are stuck with it and even more dubious imposts have quietly crept into the transaction. Of course, all the costs were always there but they were hidden and wrapped up in the overall interest rate. If interests rise again, will the added fees diminish? I doubt it somehow. The professionals call it “transparency”.

I agree with you Malcolm on identifying the various fees and justifying them according to the amount of work involved and administrative costs arising. Nowadays they have cumulatively reached such a staggering level that I believe it is the usual practice to capitalise them so they add to the mortgage value and end up being paid back over the duration of the loan. In softening their immediate financial impact on hard-up borrowers this has made it easier for the lenders to keep them moving in an upwards-only direction and, as a consequence, house-buyers have become inured to them.

Banks have always charged an arrangement fee for a bank loan or to authorise an overdraft and this was more disadvantageous than for mortgage lending because, as a rule, you could only get a loan or overdraft from the bank where you maintained your current account so you were stuck with their fee. At least there is no such restriction on borrowing for house purchase on a mortgage so there should be a competitive market and the prospective borrower should be able to easily see what the terms are and how they are determined.