Mortgage exit fee, what is this?

Weelovely1

Hi, I paid £5000 but this was to exit my mortgage early (2 years). This was 9 years ago. I saw on money tips people are now reclaiming mortgage exit fees but they seem to be a couple hundred pounds. Is mine a totally different thing? Can I reclaim?

dunstonh

Yours is not a mortgage exit fee. It is an early repayment charge.

If you buy a mortgage on special terms, you tie yourself in for a period. If you break the contract early, you have to pay the penalty (like in many walks of life). The charge exists because the lender has to finance the deal through savers and the markets and still has to pay them even if you pay the mortgage off early. So, the is fair and valid. It is not one that can be reclaimed.

Even mortgage exit fees are considered fair. The only bit that can be reclaimed on them is the difference between what was agreed when you bought the mortgage (or the last deal if you kept buying new deals) and what you paid on exit. The FSA didnt like the way lenders were increasing them over what was in the contract.