These fees used to be referred to as sealing fees and were often payable alongside deeds release fees. As deeds are now held electronically the charges have been given a bit of a rebrand and now often carry tags such as redemption administration charges.After all, lenders would hardly be justified in charging release fees when there is nothing to release. But rather than these fees reducing, they have been increasing at a dramatic pace. While at one time they would have amounted to around 75, they are now typically hitting the 200 mark and above. This jump in charges is just one of the reasons borrowers are annoyed. The other is that lenders can change these fees at any time and apply the change to all borrowers, irrespective of when they took out their mortgages. This has meant that borrowers who may only have been with lenders for a couple of years suddenly find themselves facing much higher charges compared with the levels of fees in place when they took out their deals. The variable nature and retrospective implementation of these charges has angered many and resulted in a number of complaints. The change in fees has not gone unnoticed in the media, which has gone in for high profile coverage questioning the fairness of the system. Rather than representing the administrative costs of lenders, many people feel the fees serve to deter savvy remortgage customers hopping from deal to deal. Alliance & Leicester has shouldered a lot of the negative coverage in light of the fact that its 295 fee heads the league of highest charges but it has said it will address at least one of the bones of contention. Following the course pioneered by Northern Rock, A&L has decided to fix its exit fees at the level they were when mortgages were taken out. While this doesn’t deal with the question of whether the fees should be as high as they are and whether they are commensurate with the level of cost incurred by lenders, it does help to give some transparency at the outset of mortgages. The fee that the client sees on their Key Facts Illustration will be the fee they pay if they redeem the mortgage before it runs its natural term. Most borrowers will see this as a positive move and I hope it is one that will precipitate similar policy changes from other lenders.
- Top trends
- Top trends
The number of pensioners using equity release as a means of debt consolidation indicates a worrying trend of unsecured borrowing among the older generation. Latest figures from the Institute of Public Policy Research show that almost a million pensioners with more than 100,000 of housing wealth are on means-tested benefits and half of retired people […]
Which? has published a guide entitled Buying Property Abroad warning consumers of the dangers of the overseas property market. The number of people in the UK owning a second home overseas has grown recently, and in 2003/04, over a quarter of a million people owned property abroad. No matter how cheap an overseas property may […]
Norwich Union has revealed that it is planning to launch a drawdown product within the next month. Brendan Kearns, propositional development manager at NU, says this is an area the group is looking into and hopes to enter in the near future. He adds: “We see a lot of value in drawdown products and would […]
Commitments Protection has increased the size of its sales team with the addition of five regional sales managers and business development managers.
Jim Grant – Senior Product Insight & Technical Support Analyst There’s sometimes confusion around what triggers the money purchase annual allowance. Find out what does and what doesn’t trigger the MPAA. The money purchase annual allowance (MPAA) is a reduced annual allowance that can apply to contributions to defined contribution (DC) schemes. The following table […]
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