No way out on exit fees
Several mortgage lenders have announced they are cutting or scrapping their exit fees for new borrowers.
But this isn’t necessarily a cause for celebration.
Until recently, all lenders applied an exit fee when borrowers cleared their loan.
A decade ago, £50 was typical, but they can now be as much as £295, and this is mostly profit.
The Financial Services Authority told lenders to justify these increases, leading several – including Halifax/Bank of Scotland, Royal Bank of Scotland Group, C&G, Standard Life and Northern Rock – to ditch the fees.
Portman, West Bromwich and Coventry merely reduced theirs.
But don’t assume lenders are giving up on this chunk of profit.
Abbey, Bristol & West and Giraffe have simply renamed these fees – and others will surely follow their lead.
New titles include administration, account, core term and lending fees.
Meanwhile, other lenders are boosting their set up, arrangement or reservation fees, sometimes by several hundred pounds, to make up the lost income.
So, unless you want a nasty shock, check all the fees involved before you sign up for a new home loan.
