FSA rules remortgagers may receive 2008 refund

Posted 2007-12-17

Despite attempts by the Financial Services Authority (FSA) to press lenders to make their remortgaging fees more transparent, research conducted by mform.co.uk (a mortgage authority Web site), has revealed the average cost of leaving your lender is still approximately £150 - and seldom made abundantly clear prior to the finalization of the paper work.

In its analysis, mform.co.uk also raised concerns that many mortgage companies were not making charges clear on their websites. 

The slippery practice of obscure mortgage exit fees remains the norm in spite of the FSA ruling that next year customers can reclaim fees they may have paid at a higher rate than what was revealed in their original terms and conditions. 

Offering relief of exit fees, mform.co.uk’s report shows the major lenders including the Royal Bank of Scotland Group companies, Cheltenham & Gloucester, Standard Life Bank and Lloyds TSB have completely abandoned the fees - even while most other lenders are still charging over £100.

Francis Ghiloni of mform.co.uk, stated it was good news some lenders were scrapping exit fees and the trend for rising redemption charges had stopped thanks to the FSA. 

However, he also alleged that exit fees did not directly relate to the cost of administration when closing a loan, and borrowers were beginning to realize that the additional costs were just part of the price of a mortgage deal. 

Mr. Ghiloni further surmised, “Borrowers who regularly re-mortgage 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. They should be considered at the start rather than come as a nasty surprise when it’s time to move on.”

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