Payback time on high Mortgage exit fees

medman

I have put this on here because I thought it might help people who have been forced to clear mortgages early to reduce their debt. This may be lucrative for people who have down-sized or move into rented accommodation in order to release equity.

An interesting article on the front of today's Daily Telegraph

"Millions of homeowners who have been forced to pay exorbitant fees when switching to a cheaper deal could be entitled to compensation, following a ruling from the financial watchdog the FSA. Banks and Building societies were told yesterday to reduce their charges for paying off home loans, and to reimburse customers who have been hit by soaring exit fees in the past".

Most lenders charge an exit fee which is up to six times the actual cost. Sounds a bit like Bank charges.

The financial services Authority warned lenders they will need to justify high mortgage exit administration fees in the future. The FSA added that customers who have been charged high exit fees will have the right to compensation.

The consumer organisation Which said " We now urge customers to challenge their providers if they have paid more than originally agreed in their contract"

The parallel between these unreasonable charges and illegal bank charges is quite clear and people should consider writing to past lenders to claim back their exit fees.

Time to dig out the old mortgage paperwork and see if you can claim your charges back.

Good Luck

MM

GingerSte

To be honest MM I'm not entirely surprised. I'm no lawyer but I did attend a contract law course for my job, and these fees do sound like penalties rather than just fees for administration. So as far as I'm concerned, it was just a matter of time.

However I would add a word of warning. These penalties are the banks way of sharing the risk when people take out a fixed rate mortgage. If people were to say "I'll just take out this fixed rate mortgage for when the interest rates are going up, and quickly change for free if the rates go down", the risk lies entriely with the bank. I can tell you now, the banks won't have that.

This is only my opnion though. Please feel free to argue with it.

enaid

I have already wriiten my letter to Abbey this morning requesting £46 the difference between 2003 charge and 2006 charge I will be posting it today nothing to lose by asking is there

medman

I take your point Ginge, but it's called an "administration fee" not a risk sharing fee. The FSA requires that administration charges must be "reasonable" ie reflect the true cost of the administration. These charges are more like fines.

Interestingly on page 2 of today's Telegraph the headline reads "High Street Banking "Big Five" make £4,000,000 per Hour last year":shocked:

Their charges are arbitrary and excessive, they seem to be taking money from the poor and giving it to the rich at a breath-taking pace. At least !!!!!! Turpin wore a mask! :cool2:

MM

GingerSte

I know it's called an "administration fee". I was reading between the lines and assumed you meant for fixed rate deals, where it costs you several thou to get out. Shouldn't have done that. Sorry.

About the big five taking £4M per hour: is that all? They're going to have to raise their game and figure out how to take more money off their customers!

IAbout the !!!!!! Tupin comment: I've always considered myself more at risk from men in suits than men in hoods. At least men in hoods can only take what I've got at the time from me.