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How to reclaim Mortgage Exit Fees
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Last update : September 2010
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Mortgage lenders have over the last few years developed a nasty habit of sharply raising their mortgage exit fees. This is a charge when a mortgage is cancelled, for example -
- Your present mortgage is with the ABC bank
- But you remortgage to a better deal offered by the XYZ Bank
- ABC will therefore charge you an exit fee
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| The problem is not the exit fee itself rather how much it currently is versus how much it's supposed to be as indicated in the original contract.
For example -
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- You took out a mortgage where the contract will have stated the redemption fee (another name for exit fee) was a nominal £100
- 4-5 years later you wanted to remortgage to a cheaper deal but you were charged £400 and not the £100 as the contract clearly stated
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| So what's going on?
I believe it's the lenders playing games again. Their strategy is simple -
- Overcharge everyone on the assumption the majority either won't notice or even if they do they won't complain
- But if anyone does complain quietly refund the money
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| To reclaim Mortgage exit fees do the following |
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Step 1 - Find out how much you've paid
If you already know the amount, go to step 2. If not then send your lender the following letter -
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Name and address of your mortgage provider
Date
Dear Sir or Madam
I request that you please provide me with details of the mortgage exit administrative fee I paid on (add the date if you can).
I understand that you are obliged to provide this information under the Data Protection Act 1998.
I look forward to hearing from you within 40 days.
Yours faithfully
Your name
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| Step 2 - Ask for a refund |
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Name and address of your mortgage provider
Date
Dear Sir or Madam
I refer to the mortgage exit administrative fee of £XXXX you charged my account.
I am writing to request you repay this fee in full. If you are not able to justify how you calculated the fee of £XXXX to my satisfaction, I intend to take the matter further and claim the full amount through the Financial Ombudsman Service.
The basis for this request is that under the Unfair Terms in Consumer Contract Regulations and/or the law of penalties. I believe the level of the mortgage exit fee is unfair and therefore unenforceable.
The Financial Services Authority stated on the 26th January 2007 in their statement on mortgage exit fees that such costs for exiting a mortgage may include deed release fees, Land Registry charges, staff processing costs and a reasonable proportion of general overheads. Unless you are able to demonstrate the fee covers administrative costs only, I believe the fee is disproportionate and unnecessary.
Yours faithfully
Your name
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| If they don't refund the money |
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If they don't offer a refund within 8 weeks of your letter make an official complaint to the Financial Ombudsman. There's plenty of information of how to do this on their website -
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