Fixed mortgage get-out charges average over £6,000 according to research from MoneyExpert.com.
The financial comparison website is warning that homeowners who are stuck on uncompetitive fixed-rate mortgages will have to fork out an average £6,370 to get out of their current deal.
The recent rate rises have caused homeowners to surge towards fixed deals according to MoneyExpert.com leaving many vulnerable to hefty early redemption charges if they change their mind.
The Bank of England is widely expected to keep interest rates at the current six-year high of 5.75 per cent today but there are still concerns rates will rise in the coming months.
MoneyExpert.com analysis shows redemption penalties for leaving a fixed-rate mortgage early do not vary massively depending on whether you choose to leave in the first, second or third year of your deal.
The average fee for leaving a fixed rate mortgage in the first year is £6,631.55, in the second year £6,225.57 and in the third £6,254.18.
Lenders can choose to charge either a percentage of a customer’s total loan or an agreed number of monthly repayments as a fee for reneging on a fixed deal.
MoneyExpert.com chief executive Sean Gardner says: “Homeowners have been told to fix their mortgage deals since last summer as interest rates continue to rise, and lenders have obviously been keen to capitalise on this.
“Choosing a fixed rate mortgage is a long-term commitment and a binding contract – so lenders are well within their rights to charge you if you want out.
“The key thing is to make sure you read the small print when signing up to a fixed deal. Redemption charges fees vary enormously and will also depend on the term you agree to – lenders will be less happy if you leave a seven-year deal after 12 months than they will if you leave a two-year deal in your second year.
“With further rate rises not out of the question, we anticipate that even more homeowners will consider fixing before the year is out. So it’s important that people are aware of all the pitfalls – as well as the benefits – of fixed rate mortgages.”
The MoneyExpert.com figures show that early redemption fees on fixed rate mortgages can be as low as 1 per cent of your loan – only £1,500 on a £150,000 mortgage. However, customers could be charged up to 13 monthly repayments – £13,235 – for leaving a longer deal of seven, eight or even ten years.