FDA pushes to eliminate exit fees
Despite a recent crackdown on mortgage exit fees, customers are being warned to be careful when changing lenders.
Mortgage website mform.co.uk has completed research showing that the average cost of closing a loan remains about £150. This is regardless of efforts made by the Financial Services Authority (FSA) in August to make the process clearer to customers.
The website’s analysis covers all major lenders. Although a few such as Royal Bank of Scotland group, Standard Life Bank, Lloyds TSB and Cheltenham & Gloucester have abandoned fee schemes, most continue to charge over £100.
According to mform’s report, many mortgage companies were not making charges clear on their websites.
FSA is still pushing to make lending terms more transparent and has ruled that next year customers may reclaim exit fees if they paid more than the amount agreed to in the original terms and conditions of their contract.
Francis Ghiloni of mform praised lenders who have eliminated exit fees and attributed the improving situation to the FSA’s work.
“They should be considered at the start rather than come as a nasty surprise when it’s time to move on,” Mr. Ghiloni said, referring to the hidden fees many borrowers encounter when trying to wrap up their mortgages.
Borrowers are finally waking up to the fact that such charges are part of the price of the mortgage deal - they don’t relate to any administration costs.
Improvements spearheaded by the FSA would be especially helpful to people who regularly remortgage and move from lender to lender.
Mr. Ghiloni advised borrowers to learn what they could at the outset of their loan and to “take into account exit fees as well as application fees and other costs which will have an impact on the true cost of their loan.”