Mortgage exit fees - don't get caught out! - Mortgages - News - Moneyfacts


Mortgage exit fees - don't get caught out!

Mortgage exit fees - don't get caught out!

Category: Mortgages

Updated: 31/10/2008
First Published: 29/08/2007

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The banks and building societies have found themselves increasingly under the microscope regarding the level of fees being charged. The focus has now switched to mortgages with the FSA reportedly unhappy with the lack of transparency surrounding Mortgage Exit Fees and gave lenders until 31 July 2007 to announce their charging strategy. Lenders have been charging borrowers £300 or more when they redeemed their mortgage to switch to a better deal, whereas the true administrative cost of closing a mortgage account is believed to be closer to £50. Many lenders have now either scrapped or reduced these fees, or agreed to fix exit fees at the level when the mortgage was originally taken out.

This might sound like good news for the 12 million mortgage borrowers in the UK, but research undertaken by Moneyfacts reveals that when fees are reduced in one area, they reappear in another form somewhere else.

In the case of mortgages, we have witnessed mortgage arrangement fees rising at an alarming rate. Five years ago we were seeing arrangement fees of around £399, but we're now witnessing arrangement fees of three times this size or even more..
So the message is to do your homework and make sure that you look at all of the mortgage fees, as these fees might wipe out any benefit from what appears to be a very competitive headline interest rate.

Moneyfacts' mortgage best buys include all fees as well as the interest rates, so that you can do a side-by-side comparison very easily.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Halloween horrors that put people off a home

Halloween is just around the corner, and many people will be getting their homes ready for a night of spooky fun. However, if you’re trying to sell your home, there are some real-life horrors that could put people off…

Londoners could be saving for a century to buy

We all know how expensive property can be in London and how tricky it is to get on the ladder, but the figures could still come as a shock, with a study finding it could take more than a century for the typical Londoner to save a deposit.

85% of remortgagors benefit from lower rates

Mortgage rates are among the lowest ever recorded, and in the case of fixed rates, they just keep falling! This means it’s never been cheaper to fix your mortgage rate for the long term, and unsurprisingly, remortgagors are taking advantage.