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Last Updated: Friday, 17 February 2006, 10:37 GMT
Mortgage switchers face high fees
Coins
Exit fees are on the increase
Mortgage lenders are hitting borrowers with high exit fees when they switch to a rival lender, it has emerged.

BBC Radio 5's Wake Up to Money show found some lenders, including Abbey and Alliance & Leicester, had raised exit fees sharply in the past two years.

Many borrowers have found they will face fees of 200 to 300.

"The costs of redeeming a mortgage are actually coming down...but charges are going up," Ray Boulger of mortgage broker Charcol told the BBC.

No guarantee

Exit fees are meant to reimburse the mortgage provider for the costs of taking property deeds out of storage, forwarding them to a solicitor and producing a final statement of account.

When people sign up for a mortgage they are told that if they redeem it they will have to pay an exit or administration fee.

But the size of the fee, unlike other mortgage charges such as early redemption penalties, is not guaranteed to stay the same.

"By the time you redeem your mortgage it can be double the time you took your mortgage out," Mr Boulger said.

Mike Few, a teacher from Yorkshire, told Wake Up to Money that when he switched his two-year mortgage from Alliance & Leicester he was taken aback at the size of the administration charge.

"(The word) administration fee made me think it was like a nominal fee just for printing out the paperwork and send it onto you, but almost 300 is not insignificant," Mr Few said.

"Charges should be stated and should be stated clearly," he added.


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