Arrangement fee
- Thread starter Vanilla
- Start date
Hi Vanilla,
In my experience, the following banks will charge arrangement fees:
Anglo Irish, IIB, Bank of Scotland, ACC Bank & in some instances, Ulster Bank & Bank of Ireland. NIB I gather have also charged fees from time to time, on term loans.
As I have it, the fee element of the pricing for the loan is preferred, as it was being taken directly into the Bank's income on Day 1 when the loan was drawndown, rather than over a period of time as would be the case with the Bank's margin on the loan interest. I think the way Banks account for their income is changing now, so this may not be the case in the future. Fees are also sometimes used to pay intermediaries, I believe.
Getting a fee waived is down to negotiation, in some instances it may be possible to get it waived, or reduced, in others not. If you don't ask ....
The bottom line is the overall cost of the credit I guess, so perhaps work out the cost including the fee & consider the overall cost, in comparison ot what the borrower might pay elsewhere, if there were no fee being charged but perhaps, a higher lending rate.
Also, I guess the question must be asked as to whether the loan is outside of traditional bank guidelines, or for some reason considered a little more "risky" than the typical loan etc.
In my experience, fees have tended to range between 0.5% and 1% of the loan amount, although in some instances could be higher.
Hope this helps,
Cheers
G>
[broken link removed]
In my experience, the following banks will charge arrangement fees:
Anglo Irish, IIB, Bank of Scotland, ACC Bank & in some instances, Ulster Bank & Bank of Ireland. NIB I gather have also charged fees from time to time, on term loans.
As I have it, the fee element of the pricing for the loan is preferred, as it was being taken directly into the Bank's income on Day 1 when the loan was drawndown, rather than over a period of time as would be the case with the Bank's margin on the loan interest. I think the way Banks account for their income is changing now, so this may not be the case in the future. Fees are also sometimes used to pay intermediaries, I believe.
Getting a fee waived is down to negotiation, in some instances it may be possible to get it waived, or reduced, in others not. If you don't ask ....
The bottom line is the overall cost of the credit I guess, so perhaps work out the cost including the fee & consider the overall cost, in comparison ot what the borrower might pay elsewhere, if there were no fee being charged but perhaps, a higher lending rate.
Also, I guess the question must be asked as to whether the loan is outside of traditional bank guidelines, or for some reason considered a little more "risky" than the typical loan etc.
In my experience, fees have tended to range between 0.5% and 1% of the loan amount, although in some instances could be higher.
Hope this helps,
Cheers
G>
[broken link removed]
Ive just been offered a facility from one of the banks listed earlier, which is being used to build a new house in my side garden - which will become my new PPR when built. I will immediately sell the existing PPR next door to repay the load and interest accrued, within 2 years from drawdown.
Ive been quoted 1.95% over URIBOR interbank rate, and an arrangement fee that amounts to 1% of total.
Does any banking person out there know whether I should try and negociate the 1% fee with the bank, and if the rate quoted is reasonable?
The site with full planning is the sole security on the load, but its value is more than twice the money being borrowed.
any opinions gratefully recieved.
Ive been quoted 1.95% over URIBOR interbank rate, and an arrangement fee that amounts to 1% of total.
Does any banking person out there know whether I should try and negociate the 1% fee with the bank, and if the rate quoted is reasonable?
The site with full planning is the sole security on the load, but its value is more than twice the money being borrowed.
any opinions gratefully recieved.
Hi
Definitely worth a bit of effort, on the negotiation side I'd think ... but to be fair, if your using the bank's money to build the house, won't have the loan for more than 2-years etc then from a commercial point of view, they are probably entitled to expect something back from you
Good luck
G>
Definitely worth a bit of effort, on the negotiation side I'd think ... but to be fair, if your using the bank's money to build the house, won't have the loan for more than 2-years etc then from a commercial point of view, they are probably entitled to expect something back from you
Good luck
G>
okidoki987
Registered User
- Messages
- 24
1.95% over Euribor is a floating rate and when interest rates go up, so does the rate on your loan but 1.95% over isn't bad.
The loan is 50% of the value of the security so it's worth your while going to as many Banks as you can and ask them for their rates and fees and use one against the other.
If a different Bank comes back with a better offer, go to your original lender (if you want to deal with them). and tell them you're going to go with another lender as they are cheaper and see if they counter the offer.
If they do, then you're better off, if they don't just go to the cheapest lender.
Don't tell them what rates you're getting, let them show you their rates first, otherwise they will just undercut by a tiny amount which may not have been their best rate!
Borrowing money is like buying blinds, always get at least 2 quotes for the same thing.
The loan is 50% of the value of the security so it's worth your while going to as many Banks as you can and ask them for their rates and fees and use one against the other.
If a different Bank comes back with a better offer, go to your original lender (if you want to deal with them). and tell them you're going to go with another lender as they are cheaper and see if they counter the offer.
If they do, then you're better off, if they don't just go to the cheapest lender.
Don't tell them what rates you're getting, let them show you their rates first, otherwise they will just undercut by a tiny amount which may not have been their best rate!
Borrowing money is like buying blinds, always get at least 2 quotes for the same thing.
Hi
While I agree with getting a couple of quotes, also keep in mind that Runner will have to do a certain amount of work each time (s)he approaches a lender, wait a further period for loan approva and paperwork etc.
Runner should keep an eye on dates in the paperwork such as latest date for acceptance / drawdown, other costs such as valuations, surveys, bank transfer fees, legal fees etc etc also.
Cheers
G>
While I agree with getting a couple of quotes, also keep in mind that Runner will have to do a certain amount of work each time (s)he approaches a lender, wait a further period for loan approva and paperwork etc.
Runner should keep an eye on dates in the paperwork such as latest date for acceptance / drawdown, other costs such as valuations, surveys, bank transfer fees, legal fees etc etc also.
Cheers
G>
Thanks garretod and okidoki987 for replies.
Hadnt thought about the short term issue and its affect on what charges that are applied - ie the bank has to make a profit. Ironically, I got the full offer and contract folder as a result of a single email enquiry, so had no work to do - i expected just an outline letter of offer and conditions.
Need to read all the small print (only arrived friday evening) as suggested. I gather then that the interest rate is fairly reasonable at 1.95%+, but I should start with trying to reduce the arrangement fee - which sound awfully like 'hello money' to me!
Wonder is it possible to negociate it away completely?
Might shop around a bit more as well. Not all banks though do this type of finance I think, since I want to just use the site as collateral and not do any repayments or interest payments for the 2 years I need the money.
If anyone can recommend any bank that might do this - dont want to name the bank involved in case it provides traceability!
Hadnt thought about the short term issue and its affect on what charges that are applied - ie the bank has to make a profit. Ironically, I got the full offer and contract folder as a result of a single email enquiry, so had no work to do - i expected just an outline letter of offer and conditions.
Need to read all the small print (only arrived friday evening) as suggested. I gather then that the interest rate is fairly reasonable at 1.95%+, but I should start with trying to reduce the arrangement fee - which sound awfully like 'hello money' to me!
Wonder is it possible to negociate it away completely?
Might shop around a bit more as well. Not all banks though do this type of finance I think, since I want to just use the site as collateral and not do any repayments or interest payments for the 2 years I need the money.
If anyone can recommend any bank that might do this - dont want to name the bank involved in case it provides traceability!
I have heard that staff in banks are on 'targets' to get top pay increases/bonuses etc. the arrangement fee is classes as fee income so that every €50/100 brings that staff member closer to his/her bonus. We are being ridden all the time. even free banking charges these fees if they can get away with it.