Changing mortgage lenders can lead to exit fees
Mortgage customers are being charged exit fees when changing lenders, despite recent campaigns by watchdogs to stop the practice. Mortgage website mform.co.uk has published research saying the average cost of changing lenders is £150, despite attempts by the Financial Services Authority (FSA) to make exit terms more transparent.
The FSA has urged lenders to make the charging of exit fees clearer, resulting in lenders including Royal Bank of Scotland , Standard Life, Cheltenham & Gloucester and Lloyds TSB dropping fees. However, many lenders are still charging over £100 exit fees with many not making charges clear to their customers or on their websites. On top of urging lenders to drop fees, the FSA has ruled that from 2008 customers can reclaim exit fess if they pay a higher charge than set out in the original terms.
Francis Ghiloni of mform believes that stopping exit fees is good for consumers. However, he believes consumers should begin to factor exit fees into the cost of remortgaging, rather assume they are an administrative charge for closing the loan. Ghiloni said:
“ [Exit fees] should be considered at the start rather than come as a nasty surprise when its time to move on. 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.”