Millions of borrowers may be entitled to claim refunds after the Financial Services Authority criticised the way mortgage lenders have imposed exit charges on customers who have moved their loan to a different company.
Mortgage exit fees have risen sharply in recent years leading to accusations of unfairness.
The FSA has now told lenders they must either scrap their exit fee or fix it at the same level for the duration of the loan.
Have you paid an exit fee which you think was unfair? Did you complain to your lender about it at the time? Will you now try to reclaim the money?
You sent us your views, a selection of which are below. This debate is now closed.
My daughter recently remortgaged after 3 years. In the original documents Standard Life quoted a redemption fee of £150. In the completion statement we now see a discharge fee of £200. Another reason for confusion - exit fee, redemption fee - discharge fee!!! She is now going to write to Standard Life asking for a refund of £50.
I have just remortgaged after having had a mortgage with the A&L for 16 years. The redemption fee was £295. I am writing to them about this, but I wonder if anybody knows what the redemption fee would have been back in 1990?
I took out a mortgage in 1996 through the Bradford & Bingley Building Society and arranged a discounted rate in 2004. In September 2005 I paid off the mortgage in full and suffered a redemption penalty of roughly £3500 which had been expected. However, the building society also imposed an exit fee of £235. I complained most vehemently about this extra fee at the time, pointing out that after having paid a massive redemption penalty this charge was probably out of proportion with the amount of work involved and grossly unfair but my words fell on deaf ears. In the light of what I have heard on your programme I will try once again to claim a refund of my money.
I cannot understand why the person from the FSA didn't agree with you that the fees - and this should go for all fees - shouldn't reflect the true cost of providing the services for which the fee is being applied. Later in the programme you had a piece about unfair (probably illegal) bank charges. There is no difference between the bank charges and the charges levied at various stages in a mortgage. Indeed, surely the same should hold for the initial charges - many of these are now astronomically high and must just represent a way of the lender getting additional profit, rather than being a true reflection of the costs involved. The lenders should get their profit from the interest paid on the loan, not from these inflated fees.
Last year my husband and I repaid our Mortgage a few years earlier than planned and were charged an 'administration fee' of over £100. I queried this but was told I had to pay for the account to be closed and to have the deeds sent to us so I did. I shall now be contacting the Building Society to seek reimbursement of the amount we paid.
I think that is a fair idea to scrap exit fees. My quibble is that my last mortgage with West Bromwich Building Society (4.2% fixed for 2 years) had a set-up fee of £1,400. It was a 'buy to let' and was the only way I could get a low rate with the amount I needed to borrow to cover the interest with a fair rent. I need to switch after 2 years as the payments shot up a further £200 p/m. I thought it was an expensive fee but wanted to buy this particular property. I am not wealthy but need to use my savings and invest wisely as I retired early from nursing due to a back injury. I have got into the 'buy to let' game to see if my money can grow and make up for lost earnings before I am 65.
My 25 year mortgage recently came to an end and I got a fee note for £195. I wrote and asked them to send me a copy of any agreement or document I had signed which indicated that this fee would be payable. I got a letter back saying there had been a mistake and the fee should have been £10 but in the circumstances they were going to waive the fee. The whole thing is a total disgrace and Michael Coogan from the Council of Mortgage Lenders simply avoided answering the question regarding how what they were doing affected trust between the financial services industry and the consumer.
David G Wallace
Mortgage fees: Good to hear your report about exit fees. What about fees charged by banks to give permission when customers let their homes? I had to pay my lender a total of approx £400 in annual fees over four years; all I got for it was a standard letter giving me permission to let. They had me "over a barrel" so I had to pay it. The fee seems to bear no relation to the cost to the bank. Also, I can find no small print in the original agreement which warns of fees. Before I signed up for the product, the lender's mortgage adviser assured me that letting would be OK - did not mention any fee. Where can I get advice on how to complain? Are the FSA bothered about this?
I redeemed my mortgage on Monday 29/1/07 and on Tuesday 30/01/07 I rang C&G to ask about getting a refund. They said my refund will be £45 which is the difference between the current redemption charge of £225 and the specified charge on a further advance I had in 2004. I said this was very unfair as most of my mortgage was taken out in 1999 when the specified redemption charge was only £50. I was advised by C&G that they had been advised by the FSA that this was acceptable. I made a formal complaint to the C&G as this method appears not to be in the spirit of the ruling. I asked them why they did not use a pro-rata'd refund calculation instead of using a method that gives the least back to the customer just because they happened to have a further advance well after the majority of loan was first taken out. C&G said they will contact me in due course about my complaint.
I was very happy to hear your program today, because a year ago I wrote the FSA about this problem. My mortgage provider C&G put up exit charges from £50 back in 2000 to £225 today. Unbelievable! Thanks.
We asked The Abbey in 2003 for a short term mortgage (Max 5 years). We agreed a termination fee of £80 and were also advised that release of deeds would be £99 but Abbey never held these. When we notified Abbey that we would pay off in 2006, we expected to pay only the £80 but were told it would be £225. Challenged, Abbey said they had "amalgamated" the two charges.
Having heard on Money Box that this matter was being examined by the Ombudsman, we offered to pay the £80 plus an extra £10 "to cover their unsubstantiated increase in costs" and said that if this was refused we would pass full details to the Ombudsman. They wrote back offering us a CHEQUE for £225 - presumably so that we would pay the full fees and thereby enable them to tell the ombudsman that customers were paying up? Obviously, we accepted this but wonder what their real motivation was.
In 2004 I paid off a year early my mortgage with the Woolwich. I was charged a redemption fee which was unexpected and not mentioned in my original contract. How does this differ from the mortgage exit fee discussed in the program?
Took out a mortgage in 1986 for £15,000 and was shocked to pay £225 handling fee when it was paid off in 2006.
The comments we publish are not necessarily the views of the BBC but will reflect the balance of views we have received. It is helpful if contributors state if they work for any organisation relevant to an issue discussed. Readers should form their own views on whether messages published represent undeclared interests, or views prompted by a common source.