Arrangement Fee

arrangement feeWith almost every mortgage product these days, there is an arrangement fee payable. These vary from lender to lender so it is advisable to consider this when selecting a mortgage product as the cost can be significant.

What is an Arrangement Fee?

An arrangement fee is a commitment or administration fee usually payable to the lender to reserve the mortgage funds. Lenders must secure funds from financial markets and investments in order to lend out for mortgage purposes and the arrangement fee is the cost of doing this.

Arrangement fees will vary quite considerably between lenders as each one has different methods of securing funds. An arrangement fee can vary from a few hundred pounds up to 1% of the amount to be borrowed.

You may find some lenders advertising a much lower interest rate in order to rank higher in mortgage best buy tables, however, this does not necessarily mean it is a cheaper mortgage. This is because some lenders will provide a lower interest rate, but in return will charge a higher arrangement fee. When considering a mortgage product, you should ensure that the money you will save from the lower interest rate will at least cover the increased arrangement fee.

Advice regarding Arrangement Fees

  • The arrangement fee should be considered when calculating the total cost of the mortgage. Make sure that if you're getting a lower interest rate that the savings from this lower rate is enough to cover any difference between arrangement fees. Effectively, you must at least be saving enough from the interest rate to make back the higher fee for it to be worthwhile
  • There are options to add the arrangement fee to the mortgage balance. If you choose this option, bear in mind that interest will accrue on this fee and so you will end up paying back close to double over the term of the mortgage


  • An arrangement fee is a charge payable to the lender for securing the mortgage funds
  • Arrangement fees vary significantly between lenders so it is best to shop around
  • Some mortgage providers allow you to add the fee to the balance of the mortgage whilst others require the fee in advance
  • Ensure that the cost is recovered from the savings in interest if you are paying a higher arrangement fee

For more information about 'Mortgage Arrangement Fees', you can call us on 020 8783 1337 or submit an online quote.