|
Summary
After years of lenders having a free hand to increase exit charges, the FSA steps in to restore fairness for consumers. This article explains.
Author: Michael Challiner
In the last 3 to 5 years we have seen rises of up to 450%
in the exit fees charged by lenders when borrowers redeem their mortgage. But at last the Financial Services Authority (FSA) ha seen the light and is going to crackdown on these increases.
Lenders have been telling new borrowers about the exit fees currently charged, but the lender has retained the right to increase those charges at any time and without advising borrowers. This amounts to a free hand to increase these charges and many lenders have taken the opportunity gladly.
Take the Woolwich for example; they've increased their exit fee from what was £95 to £275. The Cheltenham & Gloucester has increased theirs from £50 to £225. The lenders have clearly been trying to penalise those of us who regularly switch their mortgage to get the best interest rates – the so called rate tarts – and at the same time line their coffers.
However, the FSA is now in talks with the mortgage lenders to bring them to heal. The FSA wants fees to be fully disclosed at the outset and for the disclosed exit fee to be fixed for the duration of the mortgage. The FSA hopes to have agreed a binding undertaking from the lenders by June this year.
Click here for part 2
Did you Know?
Over recent years, the cost of moving house has risen at more than twice the rate of house price inflation. The main offender has been stamp duty.
Today, a move from the average semi worth £174,750 to an average detached house costing £293,250, will cost some £12,500. Five years ago the same move would have cost just £4,500. These costs include Land Registry costs, local authority searches, estate agents, solicitor's fees, and of course, stamp duty. This means that house moving costs have increased by 176% whilst house prices have themselves risen by 70%.
This increase in home move costs has been greatly influenced by the fact that the average price for a detached house has now burst through the £250,000 level above which stamp duty jumps from 1% to 3%.
For some homeowners, these costs have influenced a decision to stay put and remortgage. That's one of the reasons why remortgages have become so popular.
Today's Tip
If you get a quote for life insurance from your bank or even directly from a Life Insurer, you may well find that it's very expensive. Online life insurance brokers tend to provide the cheapest quotes. That's because they widely search the market for you - so their life insurance quotations are likely to be much cheaper.
Did you know?
Secured loans always attract the lowest interest rates. That's because the lender is protecting his risk by taking a legal charge against your property. Then, if there is a default, the lender can call in the loan and, in the final event, sell the property in order to recover the money you owe.
Did you know?
There can be a price differences between car insurance quotes by as much as 50%. That means it really pays to shop around. And don't forget, when it comes to renewal time shop around again! Don't automatically accept a renewal notice!
|
