Arrangement Fee

What is an Arrangement Fee?

An Arrangement Fee (sometimes called a Completion Fee or Booking Fee) is an administration charge made by lenders for arranging credit – usually for a mortgage or for a business loan and sometimes for car finance.

Under the Consumer Credit Act 1974, 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 1% 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.

The Arrangement Fee is intended to cover the administrative costs of setting up the credit facility.

You should look very carefully at any conditions associated with the fee: some lenders expect you to pay when you submit your mortgage application and it might not be refundable, though this must be disclosed at the point of agreement. Other lenders add the Arrangement Fee to the loan, which means that you will pay more in interest.

Be wary of mortgage lenders that 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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