Exiting Can be Tougher Than Entering

Posted 2007-12-17

When purchasing or refinancing a home, the fees you must pay can seem endless and lack clear reason. One of these fees in particular has a reputation for being unexpected and hidden. Most mortgage customers are surprised to find themselves having to pay an “exit fee” when leaving one company for another. Mortgage website mform.co.uk alerts mortgage holders that this fee is typically £150.

Frances Ghiloni, of mform, stated: “[The fees] should be considered at the start rather than come as a nasty surprise when it’s 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.”

Recently, watchdogs and the Financial Services Authority have taken steps to convince lenders to get rid of these charges, or at least make them clear to customers upon entering into a mortgage.

Advantageously to mortgage holders, the Financial Services Authority ruled that in 2008, people who have incurred a higher exit fee than they expected (according to what was stated upon entering the mortgage) can reclaim the fee.

Some of the larger banks have gone ahead and rid themselves of exit fees. Mform’s list includes Royal Bank of Scotland Group companies, Standard Life Bank, Cheltenham & Gloucester and Lloyds TSB, among others. Ghiloni said this trend is good news and comes as a result of the Financial Services Authority’s prompting.

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