What does Arrangement Fee mean?

An Arrangement Fee is usually part of a mortgage related contract, and it implies that the lender will charge an extra amount which will cover for the basic expenses. These basic expenses include the reserving of funds, and an important factor is whether the mortgage is a fixed or variable rate one. Arrangement Fees and Administration Fees are usually interchangeable, but basically include the same expense type requirements.

Depending on the lender, there are several possibilities of paying this fee: some attach it to the loan itself, so where you make a loan of $50,000, the lender might set an arrangement fee of $500, and that basically your loan’s amount is of $50,500. Or, the fee might be required to be paid apart from the loan, or it might be as well subtracted from the value of the loan.