Beware Of Mortgage Redemption Fees

Beware of​ Mortgage Redemption Fees
Recent research by the​ Moneyfacts mortgage team has highlighted an​ alarming increase in​ the​ number of​ mortgage providers who have increased their redemption fees.
In the​ twelve months to​ 31 March 2018,​ 53 providers have upped their redemption penalty,​ 23 of​ which have increased by over 100% .​
Some examples of​ the​ higher fees are Alliance & Leicester increasing their fee from £195 to​ £295,​ Cheltenham & Gloucester from £100 to​ £225 and the​ Royal Bank of​ Scotland from £75 to​ £225.
With the​ mortgage market as​ competitive as​ it​ has ever been and with interest margins being eroded,​ lenders are increasing these fees to​ try to​ recoup some of​ this lost revenue but also to​ try to​ deter customers from switching their mortgage.
The redemption fee,​ also known as​ a​ discharge fee,​ deeds fee,​ exit fee or​ sealing fee,​ is​ basically an​ administration fee that you​ will have to​ pay when you​ repay your mortgage or​ move your mortgage from your existing lender .​
When these fees are increased,​ it​ is​ important to​ remember that they don’t just apply to​ new applicants,​ but also to​ the​ many thousands of​ existing customers with the​ lenders concerned.
Darren Cook,​ Head of​ Mortgages at​ Moneyfacts comments: If you​ are only looking at​ keeping your mortgage with the​ same provider for a​ couple of​ years,​ a​ £295 exit fee certainly needs to​ be taken into account when shopping around .​
With 42 providers having an​ exit fee of​ less than £100 and 16 with no fee at​ all,​ it​ is​ worth weighing up the​ impact of​ these lower fees,​ not just the​ interest rates.

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