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Broker attacks lenders over exit charges

Mortgage lenders are raising exit fees in an indiscriminate fashion and treating customers unfairly according to an Essex broker.

The Mortgage Practitioner sole trader Danny Lovey says lenders are ripping off customers and fees are being manipulated to give additional income or to maintain client retention.

Alliance & Leicester increased its charge from 195 to 295 for customers to have the right to switch their mortgage. Cheltenham & Gloucester’s fee has risen from 180 to 225 while Coventry Building Society has raised its fee from 125 to 195.

Nationwide will be introducing an exit penalty on May 1 of 90. It says it has had to do so as most of its competitors impose a charge.

The charge, also known as a deeds release fee or closing administration fee, is supposed to cover the admin costs incurred by customers who want to close a loan. Lack of guidance and uniformity means the fees vary widely.

Lovey says: “Lenders have consumers over a barrel if they want to change their mortgage. It has become a dishonest way of lenders imposing an additional redemption.”

Alliance & Leicester mortgage director Stephen Leonard says: “We believe the redemption administration charge reflects the processes and costs involved when closing a mortgage account.”

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