Money
Getting the best deal
Save £100s on....mortgage fees
<span class="sectintro-b">Have you paid off your mortgage or switched lenders since 2003? If so, you could be in for a cash refund, writes Teena Lyons </span>
Following a recent Financial Services Authority (FSA) investigation into mortgage exit fees, which found lenders had increased fees excessively over the past four years without spelling this out to borrowers, anyone who has remortgaged in that time could be in line for some money back. With experts predicting an up to £100 million cash return, should you be demanding a share?
Step one: Check your facts - are you eligible? When you pay off a mortgage you will be charged an administrative fee for closing a mortgage - known in the business as a mortgage exit administration fee (MEAF). They are also known as sealing fees, final administration fees or discharge fees. This is not to be confused with application fees or early redemption penalties when you repay or switch your mortgage mid-term.
Step two: Get informed. The FSA stepped in to prevent 'elastic' home loan exit fees which soared far ahead of inflation - and the amount stated in the original mortgage contract. Borrowers who have been hardest hit are those who have paid off a loan early over the past four years - it wasn't until 2003 that lenders really started to hike exit fees. Expert estimate there may be up to 10 million home loan customers in this situation. So check your original contract - is the fee stated there different from what you finally paid? If you have lost the paperwork, don't worry, most lenders retain records for at least seven years.
Step three: Contact your lender. Despite lenders being rapped over the knuckles by the FSA, the onus is on the borrower to realise they have been over-charged and pursue their own claim. Some lenders have set up central units for refunds or helplines, but each one has a different approach. Contact your individual lender for details on how to reclaim the overpayment, but be prepared to put the complaint in writing. You should expect to get a refund of the difference between the actual fee paid on exit and the original fee. Some lenders will also give you interest on top of the refund too - so it is worthwhile asking.
Step four: Don't take no for an answer. Following the FSA statement in January most lenders will refund the difference without a fuss. If they do refuse, contact the Financial Ombudsman Service at www.financial-ombudsman.org.uk
