Arrangement Fee

An administration charge made by lenders for arranging credit. By law, an arrangement fee must be quoted in your written offer of credit and in your credit agreement. Not all lenders charge an arrangement fee. The size of an arrangement fee can vary from a couple of hundred pounds up to one percent of the mortgage value, which can be a sizable sum. Nowadays, if you require a fixed rate or discounted mortgage you will probably have to pay an arrangement fee.

You should look very carefully at any conditions associated with the arrangement fee. Some lenders expect you to pay the arrangement fee when you submit your mortgage application (which might not be refundable). Other lenders add the arrangement fee to the loan, which means that you will be paying more interest.

Watch out for certain mortgage lenders who offer low interest rate loans coupled with high arrangement fees in an attempt to obtain more favourable ratings in mortgage comparison tables.

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