Reclaiming Mortgage Exit Fees

With a large number of fixed rate mortgages approaching the end, a lot of people are going to be looking at new deals, maybe even moving lenders.

Or you may have changed mortgage lenders recently or even have paid off your mortgage entirely.

And this is when some lenders are strapping on extra fees. In 2004 certain lenders started to increase mortgage fees. Their reason - it said in the contract that they were allowed to.

But is this really fair? Would you be happy if a restaurant menu showed the prices as £75, but at the end the bill was £175 because the chef had had problems?

So why do the banks get away with it? Had they just increased the prices a little - in line with inflation, then eyebrows would not have been raised. But by increases of (in some cases) over £100 concerns were raised.

It is estimated that the cost of closing a mortgage is actually around £35, and lenders like HSBC don't charge a fee at all. So fees in approaching £300 seem to be totally unfair, and probably a little punitive.

Many lenders are now starting to back down and honour original agreements. So if you are terminating your mortgage, dig out the original paperwork and if they try to charge you more than stated, remind them of what the original contract said.

If you have already closed your mortgage and paid your fees it can be worth trying to claim it back. Just by writing to your (ex) bank and asking for a return of the excess fees could net you the difference. In many cases, such as Barclays, Bradford & Bingley, Bristol & West, Chelsea, Cheltenham & Gloucester, Coventry, Halifax, Nationwide, Northern Rock, RBS, Skipton and several more, just by writing to them they should refund the difference.

You might even wish to claim for more than the increase. For example, if you are expected to pay £295 you could point out that the actual cost is more like £35 and demand that you just pay that.

If you have paid, or are forced to pay, too much, then the threat of further action might help, else the Financial Ombudsman or the Small Claims Court could be your next step.