Mias Calls On Mortgage Lenders To Fix Their Exit Fees

Mias Calls On Mortgage Lenders To Fix Their Exit Fees



Mias Calls on​ Mortgage Lenders to​ Fix Their Exit Fees
MIAS,​ the​ Mortgage and Insurance Advisory Services (www.mias-ltd.co.uk ),​ is​ concerned that,​ despite the​ recent publicity and various campaigns in​ the​ press,​ borrowers are still being stung by punitive exit fees.
Lenders charge exit fees when customers redeem their mortgage in​ full,​ for example,​ by switching their mortgage to​ a​ rival lender .​
Exit fees can also be termed administration charges,​ sealing fees or​ deeds-release fees and are raised to​ cover the​ cost of​ taking property deeds out of​ storage,​ sending them to​ a​ solicitor and producing a​ final account statement .​
Borrowers are warned when they sign up that if​ they switch lenders,​ they’ll have to​ pay a​ fee – but the​ size of​ that fee is​ not guaranteed to​ stay the​ same.
Within the​ last few years,​ lenders have increased their exit penalties steeply,​ with some now topping the​ £300 mark (www.mias-ltd.co.uk/news-index.htm ) .​
Firms have claimed that these hikes are necessary because of​ their increased costs and extra work,​ yet this justification appears hollow when one considers that property deeds are now held electronically at​ the​ Land Registry.
Alistair Good,​ Managing Director of​ MIAS said: One client,​ whose penalty had increased from £85 to​ £195 compared it​ with entering a​ car park where the​ prices were clearly displayed,​ only to​ find that they had more than doubled when it​ was time to​ pay.
He added: While we appreciate that lenders need to​ recoup the​ costs incurred when a​ mortgage is​ redeemed,​ borrowers need to​ be informed about these costs at​ the​ outset .​
If the​ fee is​ excessive,​ then the​ client can look elsewhere.
Although exit fees make up a​ tiny percentage of​ overall mortgage costs,​ it​ is​ unfair to​ hit a​ customer with an​ unexpected charge,​ which can reach £300 .​
MIAS would like to​ see lenders state their exit fees clearly – and fix them at​ the​ outset of​ deals .​
In this way,​ the​ client is​ treated fairly,​ in​ line with FSA guidelines.
One example is​ Northern Rock .​
Although they charge the​ relatively high fee of​ £250,​ they do commit to​ charge the​ fee stated when the​ client signs up for the​ mortgage .​
MIAS would like to​ see more lenders adopt this approach.
Commenting,​ Roger Milbourn,​ Director of​ MIAS,​ said: Exit fees,​ though unpopular with customers,​ are here to​ stay .​
But if​ lenders are to​ lose the​ tag of​ back door charging and reduce the​ flow of​ complaints to​ the​ Financial Ombudsman Service,​ they must be more transparent about these fees.
We see no good reason why the​ exit fee cannot be fixed for the​ life of​ a​ mortgage,​ so that the​ client would be aware of​ the​ charge from the​ start .​
Under the​ current system,​ exit fees can increase by more than 350% by the​ time the​ client comes to​ redeem his or​ her mortgage .​
This makes a​ mockery of​ the​ FSA’s requirement to​ treat customers fairly despite their claims that they are not a​ pricing regulator.
In the​ absence of​ fixed exit fees,​ it​ is​ imperative for mortgage brokers to​ go through closing charges carefully with the​ client .​
The adviser should explain that the​ borrower may incur a​ punitive charge if​ they switch lenders or​ pay off their mortgage early (www.mias-ltd.co.uk/faqs.htm ) and in​ this way,​ broker and client can compare products fairly.
For further information,​ please contact:
MIAS Ltd
0845 833 0878
Managing Director: Alistair Good
alistair@mias-ltd.co.uk
Director: Roger Milbourn
roger@mias-ltd.co.uk
Notes to​ Editor:
The Mortgage and Insurance Advisory Service (MIAS Ltd) is​ a​ firm of​ impartial mortgage advisers,​ offering a​ comprehensive service to​ clients seeking residential and commercial mortgages and mortgage protection.
Founded in​ 2002,​ MIAS has quickly gained a​ reputation for providing straightforward,​ impartial mortgage advice,​ matching clients up with some of​ the​ most competitive deals around .​
MIAS’s experienced brokers have expertise in​ all sectors of​ the​ mortgage market and look after the​ whole transaction from beginning to​ end,​ making the​ process as​ smooth and as​ headache-free as​ possible.
For further information on​ the​ services MIAS offers,​ please visit www.mias-ltd.co.uk




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