What Is a Mortgage Arrangement Fee?

A mortgage arrangement fee is a type of expense that is sometimes assessed by a lender as part of the process of structuring and approving a mortgage. 

Sometime referred to as an administration fee, this type of charge may be payable up front or bundled into the total amount of the loan. Policies on the application of this fee will vary, based on the procedures of the lender and any governmental regulations that may apply to the granting of loans to individuals and business entities.

The purpose of the mortgage arrangement fee is to offset the administrative costs involved in assessing the borrower’s application. Lenders routinely utilize a number of tasks such as running credit reports, checking references, and other essential tasks that help to establish the credit worthiness of the applicant. 

In addition, the fee is often considered to cover the costs of reserving the funds that are allocated to the borrower and to also help to offset the expenses incurred as part of creating and managing the mortgage contract over the life of the loan.

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