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.
Over the past couple of years the inexorable rise of administration charges on the repayment of mortgages has been the subject of media coverage and annoyance among borrowers who find themselves stuck with significant fees when it comes to switching their mortgages.