News

Beware of Mortgage Redemption Fees

Beware of Mortgage Redemption Fees

Category: Mortgages
Date: 26/05/2005

Recent research by the Moneyfacts mortgage team has highlighted an alarming increase in the number of mortgage providers who have increased their redemption fees.

In the twelve months to 31 March 2005, 53 providers have upped their redemption penalty, 23 of which have increased by over 100%. Some examples of the higher fees are Alliance & Leicester increasing their fee from £195 to £295, Cheltenham & Gloucester from £100 to £225 and The Royal Bank of Scotland from £75 to £225.

With the mortgage market as competitive as it has ever been and with interest margins being eroded, lenders are increasing these fees to try to recoup some of this lost revenue but also to try to deter customers from switching their mortgage.

The redemption fee, also known as a discharge fee, deeds fee, exit fee or sealing fee, is basically an administration fee that you will have to pay when you repay your mortgage or move your mortgage from your existing lender. When these fees are increased, it is important to remember that they don’t just apply to new applicants, but also to the many thousands of existing customers with the lenders concerned.

Darren Cook, Head of Mortgages at Moneyfacts comments: “If you are only looking at keeping your mortgage with the same provider for a couple of years, a £295 exit fee certainly needs to be taken into account when shopping around. With 42 providers having an exit fee of less than £100 and 16 with no fee at all, it is worth weighing up the impact of these lower fees, not just the interest rates.”

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 Any products featured may be withdrawn by their provider or changed at any time.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

House prices accelerate – but many are struggling

According to the latest house price index from the Office for National Statistics, house prices are continuing to accelerate – this time posting a rise of 9.1% in the year to February bringing the average UK property to a whopping £253,000.

Boost for sellers as confidence returns

The industry might be awash with concerns over the rapid rate of house price inflation, but it isn’t all bad news. The general upturn of the housing market has been met with increased positivity among sellers, with many being far more confident.

The MMR checklist – are you ready?

If you’re thinking of applying for a mortgage in the near future, there’s one thing you need to make absolutely certain you know about – the Mortgage Market Review.

Advertisements: