Lenders find way around exit-fees

Consumers are set to bare the brunt as mortgage lenders create new charges to make up for the Financial Services Authority’s (FSA) clampdown on exit-fee charges.

Borrowers should be aware that lenders can now get away with charging a ‘core fee’ up-front instead of the exit-fee – so don’t be fooled by mortgages that boast of ‘no exit-fee,’ as it is now more than likely that the fee will be made up by adding an extra charge.

Louise Cuming, head of mortgages at price comparison website moneysupermarket.com, said the new costs could not come at a worse time for the consumer.

She said: "New charges will hit the consumer hard at a time when mortgages are becoming less affordable, yet the lender could use the ’spin’ of marketing a no ‘exit fee’ approach."

The FSA has set a July 31st deadline for lenders to stamp out exit fees and Ms Cuming believes the way forward is for lenders to be more open with consumers.

"Transparency is the key to informed customer choice," she stated.
"If consumers are aware of the lender’s process in relation to MEAFs (mortagage exit admin fee) they can then make an informed choice before making a commitment to apply."