Why do I pay an arrangement fee when taking out a mortgage loan?
When taking out a mortgage, banks usually charge an arrangement fee. But, when we pay for this fee, what services are we really paying for?
This fee rewards the bank for the administrative procedures carried out when arranging a mortgage. It’s usually a percentage of the loan amount with a minimum charge.
Credit institutions must inform about this fee, as well as about all financial conditions before signing the mortgage contract. In addition, if credit institutions want to charge other granting fees not included in the arrangement fee, they must explain accurately and in detail the services they refer to and the cost.
Should the bank grant us a further advance on our mortgage, we must take into account that the arrangement fee shall only charge the further advance. Otherwise, we would be paying twice for a fee already paid for the grant of the loan.
To learn more about mortgage additional costs, click here