Mortgage redemption fees creep up in 2019

Analysis from Moneyfacts.co.uk shows the average mortgage redemption fee has increased by 9.3% over the past year, from £107 to £117. The maximum fee currently being charged to end a mortgage loan is £400, an increase of £175 on the highest fee of £225 last year.

While the average increase in fee of £10 may not be material, the significant increase to the maximum fee charged could see other lenders start to up their fees and fall into line.    

_{Source: Moneyfacts.co.uk, based on a panel of between 83 to 86 lenders.}

Borrowers concerned about paying a fee at the end of their mortgage could consider selecting a lender who doesn’t charge a redemption fee or look for a variable rate mortgage, as around a third of these don’t usually charge to redeem a mortgage. (Our research from September 2019 showed that out of 842 variable rate mortgages, 279 did not charge a fee.)

Halifax, HSBC, Lloyds Bank, NatWest and Royal Bank of Scotland are the only lenders who have consistently not charged a redemption fee in 2009, 2014, 2018 and this year. In 2019, there were also five other lenders that did not charge redemption fees: Bank of Ireland for Intermediaries, Atom Bank, M&S Bank, Reliance Bank and TSB.

Borrowers should check the information sent to them from their lender about mortgage fees. Whenever a lender changes its fees, it should send a communication to its affected customers. Those with a mortgage that is due to end soon should look particularly closely to avoid an unexpected fee.

More information can be found in our what are mortgage redemption fees guide.