Mortgage lenders have now been accused of levying unfair and dispropotional exit fees on their customers. On the back of bank charges claims, mortgage lenders are now also being forced to pay back these unlawful charges.

Mortgage exit fees largely remained static for many years, up until 2004 when huge increases started to appear. Lenders claimed that they were allowed to do this because it was in their contracts. However, the increases seen were not in line with inflation, and were pushed up by up to £300 a time.

The Financial Services Authority (FSA) got involved and has now agreed that some of these price hikes were unfair. Customers who ended up paying these fees (if they swithced mortgages, or they paid off their entire mortgage), may be entitled to a refund.

How much the customer can claim back depends – the least amount that should be reclaimed is the difference between the fee paid and the fee stated on the original contract. You can complaing that you think the fee that you paid was too high. The lender may not wish to go to the FSA or small claims court, and may just pay you bank some of the money. Remember that the true cost of closing a mortgage is reckoned to be about £35.

An important thing to remember is that exit fees are NOT the same as early redemption penalties. Exit fees are fees charged for administrative work.

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