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wingrovebuyer, Senior Solicitor
Category: Property Law
Satisfied Customers: 737
Experience:  Bachelor of Laws (Honours); PG Diploma in Law; Member of ALA; 9 years' experience
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I arranged a mortgage via a mortgage advisor. The contract

Customer Question

I arranged a mortgage via a mortgage advisor. The contract that we signed states the following:
-The arrangement fee payable by the Client for the Arranger’s services is £398. £99 of the fee is due on application for the loan, with the balance of £299 due on completion of the Loan. The remainder of the Fee is being waived subject to the terms of the separate fee waiver agreement.

Fee Waiver Agreement states:
-The fee payable by the Client for the Arranger’s services is up to 1% of the amount of the Loan (the Fee).
-Subject to the provisions of clause 4 below, the Fee less the arrangement fee of £398, paid in accordance with the separate fee agreement, will be waived in recognition of the fact that the client has effected a policy of life assurance (“the Life Policy”) or mortgage protection insurance (“the Protection Insurance”).
-Clause 4: If, for whatever reason, the Life Policy or Protection Insurance does not come into effect or 48 months worth of premiums are not paid by the Client, then the outstanding commission amount lost by MAB in respect of the Life Policy or Protection Insurance will be payable by the Client. The amount will be payable within 30 days of the Arranger’s notification to the Client. If the amount is not paid within 30 days of notification then the Arranger’s standard fee of 1% of the mortgage amount will become payable.

We requested further clarification and we were told (via in email) that: “they can charge up to 1% of the loan but they reduce that to £99 on application and £299 on completion, as long as they can discuss the protection for the mortgage ( illness cover etc) and if we would take any protection out ,we would need to keep it up to date for at least 48 months OR our commission has to be paid back.”

Can you please confirm that we would only be required to pay the £398 according to the above terms? - we struggle to interpret the wording. Also would the email have any “weight” if the company does come back and request the 1% from us?
Submitted: 4 years ago.
Category: Property Law
Expert:  wingrovebuyer replied 4 years ago.

wingrovebuyer : Hello. My view on this is that the total fee is 1% of the loan amount, with £99 paid on application. IF you take out a life assurance policy / endowment with the Arranger, you only have to pay additional fee of £298, and that's it. If you don't take out such a policy, or if it is cancelled within 48 months, then the balance of the 1% fee is then payable. This is because the Arranger will be making a commission on the policy, which covers their loan fees too. If you don't take out or cancel the policy, they then will need to repay the commission and so you have to pay them their full fee of 1%.
wingrovebuyer : For example, the loan is £150,000. The Arranger's fee is 1%, being £1,500. You pay £99 on application, leaving a balance of £1,401. If you take out the insurance policy, you only have to pay £298 of that balance, the rest is waived. If you don't take a policy,you have to pay £1,401 on completion of the loan. If you cancel the policy within 48 months, you will have to pay the £1,401 too.
wingrovebuyer : Hello, can you leave a rating please or JA won't pay me for helping you. Thanks! WB