Beware of Mortgage Redemption Fees
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Watch Out for Rising Mortgage Redemption Fees
Summary
Recent findings by the Moneyfacts mortgage team reveal a worrying trend: more mortgage providers are hiking their redemption fees.Article
Research from the Moneyfacts mortgage team has uncovered a concerning rise in the number of mortgage providers increasing their redemption fees.
In the year leading up to March 31, 2005, 53 providers raised their fees, with 23 of them more than doubling their charges. For instance, Alliance & Leicester raised their fee from £195 to £295, Cheltenham & Gloucester from £100 to £225, and The Royal Bank of Scotland from £75 to £225.
Amidst fierce competition in the mortgage market and shrinking interest margins, lenders are boosting these fees to recover lost revenue and discourage customers from switching mortgages.
These redemption fees, also known as discharge, deeds, exit, or sealing fees, are administrative charges applied when you repay your mortgage or transfer it to another lender. Importantly, these increased fees affect not only new customers but also thousands of existing clients with the respective lenders.
Darren Cook, Head of Mortgages at Moneyfacts, advises: "If you’re planning to keep your mortgage with the same provider for just a couple of years, a £295 exit fee is a significant consideration. With 42 providers offering an exit fee of less than £100 and 16 with no fee at all, it’s crucial to assess these costs, not just the interest rates."
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