Rejected mortgage cases could cost clients up to £1,000
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Borrowers are being urged to watch out for non-refundable booking fees which could cost them as much as £999 even if their mortgage application is rejected, says EvaluateTechnologies.
Its analysis shows up to 19 lenders – around one in five of all lenders - currently charge non-refundable booking fees on some of their mortgage products ranging from £100 to as much as £999.
It says lenders are increasingly imposing non-refundable fees to cover their costs in processing applications and booking preferential rates - and if borrowers go through to complete the application they are not affected.
Julie Speed, national accounts director at Evaluate Technologies says: “The picture on fees is becoming more and more confused and the issue of non-refundable fees is not helping.
“Lenders will argue that they face costs in processing applications and if they reserve a product for a customer and that is fine as far as it goes.
“But if customers are turned down for a mortgage or are forced to pull out of a deal it will be an extremely unpleasant surprise to find that not getting the mortgage you wanted is going to cost you a lot of money. Clearly customers need to be certain that they want a mortgage when they start this process, otherwise they could end up incurring unnecessary costs.”
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Readers' comments (13)
David Richardson MCIBS | 3 Nov 2009 4:42 pm
I can see a Lenders point if the mortgage application has been sanctioned and " Funds Booked ". Then if the applicant pulls out between Offer and Completion the Lender is left with unused funds and has incurred costs which the Fee covers.
HOWEVER to retain a fee where a case has been REJECTED due to not meeting the lenders lending criteria prior to offer is immoral in my opinion and lenders should not be allowed to do this if this is happening.
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Anonymous | 3 Nov 2009 4:51 pm
It seems that an Agreement in Principle is fairly worthless with some lenders. An AIP is issued, an application is then submitted with booking/withdrawl fee only for the lender to turn round as little as a few hours later to say that the case is declined and the fee is non-refundable - highly disreputable practice.
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Anonymous | 3 Nov 2009 5:00 pm
Is it not illegal for lenders to charge a fee when they decline a mortgage?
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Anonymous | 3 Nov 2009 5:17 pm
Lenders will say what is relevant to them also which is easy for them to say because they are hiding behind a computer screen after probably being on facebook as they are individuals with no backbone if they were they would not work for a company with no morals would they! unfortunately they will continue to tarnish the name of the good lenders who say it as it is.
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Patrick Sullivan | 3 Nov 2009 5:19 pm
ok, can we have 30% of it then as we seem to do all the work for no firkin money!!!
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Anonymous | 3 Nov 2009 5:22 pm
The 2009 focus is on 'Treating Customers Fairly'. Please, PLEASE, shown me the justification on these costs!
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Jonathan Hammond | 3 Nov 2009 5:33 pm
I agree, It seems that an Agreement in Principle is worthless with some lenders. An AIP is issued, an application is then submitted with booking/withdrawl fee only for the lender to turn round as little as a few hours later to say tha and withdraw offer/mortgage and the fee is non-refundable - a very highly disreputable practice and this makes mortgage brokers lives even tougher than ever.
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Alan Mills | 3 Nov 2009 5:51 pm
I agree, had a case pass AIP and a £99 booking fee taken.
Next day I rang up to check what they required to be told case had now been declined,
They transfered me to the " underwriter " in a dehli call centre who tried to explain why she had declined it
After a frustrating 20 mins I gave up as all I understood was " declined"
What could I tell the client?
The case passed AIP with A&L fastrack without need of proof of income
Can someone tell me what's going on!
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Mike Fitzgerald | 3 Nov 2009 6:18 pm
Lenders who charge a fee and then decline the mortgage should not be allowed to keep the clients money.The FSA keep thumping on about TCF, why dont they tell these lenders to put their house in order .Its a disgrace and i expect the FSA to do their job and stamp this practice out.Mike Fitzgerald-The EMBA Group Ltd
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chris mayor | 3 Nov 2009 6:48 pm
It needs a case to go to the FSA or FOS. I cannot see how it is possible for an AIP or DIP to be granted, then turn down client and claim fees, to be "treating customers fairly".Lenders need to be accountable, it's not just about processing an application, there are people involved. I womnder, how would anyone feel if this happened to their, mother, father, brother sister, son or daughter? I would think it was very unfair. If a mortgage is agreed in principle, subject to a b and c , and they are then provided, only if the client pulls out , should the charges apply. Perhaps a small admin fee.
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