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Time is up on exit fees for mortgages

Wednesday 8th August 2007

Early exit fees on mortgages are living on borrowed time, an expert suggests.

Ray Boulger, senior technical manager at independent mortgage broker John Charcol, made the comments in light of guidance from the Financial Services Authority (FSA) which requires firms to provide customers with transparent information relating to the exit fees charged on their mortgages.

A number of lenders have abolished exit costs entirely in response to the FSA action - HSBC this week announced that it is removing all fees from all of its mortgages until September to enable customers to compare mortgages more easily.

London & Country has also launched a long-term fixed-rate offer which does not impose any early repayment charges at any time.

But Mr Boulger notes that some firms - including Alliance & Leicester and Scottish Widows - are still charging exit fees of up to £200.

"There is however now no hiding place for lenders - they have to be open about what they are doing and will have to be up front in justifying these excessive fees," he states.

Mark Lance, spokesperson for the Repossession Specialist, suggests that Britons should compare mortgages to ensure they are aware of any fees imposed by the lender.

He says: "If the client is considering moving house in the short-term there may be additional fees involved if the fixed-rate product is not portable, there may be an unplanned reason to sell the house.

"By phoning a specialist who gives qualified advice all factors can be taken into consideration."

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