Abbey fixes its arrangement fee at a mere £9,999

Eek! Many people have been horrified at the announcement that Abbey have revealed their new fees for arranging mortgages for customers - a staggering £9,999.

This fixed fee is payable on the high-end mortgages of £500,000 and over for their 2 year fixed loan deal.

Even though it sounds very expensive, it has been revealed that it can actually work out cheaper than some arrangement fees which are proportional to the value of the house ie: 2% of the property price

With some lenders, it can work out to cost about the same so there is not much in it, but the more expensive the house becomes, the more obvious the difference can be. So for very expensive houses this can work out to be much more than £10,000.

Despite Abbey reasoning that this arrangement fee is fair, many mortgage lenders offer much more affordable rates. Cheshire Building Society only charges £999, a tenth of the price.

As competition increases amongst banks and building societies on mortgage lending, different offers are cropping up. One particular Building Society now has a mortgage deal which includes the cost of getting a HIP done - the Home information packs that are required for every house sold with 3 bedrooms or more, which can cost about £300.