Remortgaging? Watch the exit fee

Tuesday, 08 Jan 2008

Mortgage customers are being warned to keep an eye on exit fees when they change lenders, despite a recent clampdown on the charges by watchdogs.

Research by mortgage website mform.co.uk revealed the average cost of leaving your lender is still around £150 despite attempts by the Financial Services Authority (FSA) in August to make terms more transparent.

While mform's analysis shows though major lenders including the Royal Bank of Scotland Group companies, Standard Life Bank, Cheltenham & Gloucester and Lloyds TSB have ditched fees, most are still charging over £100.

This comes despite the FSA urging lenders to make terms of exit fees clearer and ruling next year customers can reclaim exit fees if they paid a higher charge than that set out in the original terms and conditions.

In its analysis mform raised fears many mortgage companies were not making charges clear on their websites.

Francis Ghiloni, of mform, said it was good news some lenders were scrapping exit fees and the trend for rising redemption charges had stopped thanks to the FSA.

However, he said, it was clear the charges did not relate to the cost of administration when closing a loan and borrowers were waking up to the fact the charges were just part of the price of the mortgage deal.

"They should be considered at the start rather than come as a nasty surprise when it's time to move on," Mr Ghiloni said.

"Borrowers who regularly remortgage and move from lender to lender need to take account of exit fees as well as application fees and other costs which will have an impact on the true cost of their loan."

 

Source: http://www.myfinances.co.uk/news/