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‘High exit fees unimportant if deal is good’

High exit fees are not a problem as long as the mortgage itself is good value, says John Charcol senior technical director Ray Boulger.

He believes that a good deal will often mean an exit fee will not be triggered as the borrower will stay with the lender.

Boulger’s comments come after new lender ING Direct, which does not charge exit fees, claimed this week that the average cost to a lender of a borrower leaving is 35 but some lenders charge up to 295 in exit fees.

The FSA is expected to reveal the outcome of its investigation into exit fees in the coming weeks after it asked lenders earlier this year to justify their policy of raising the fee during the mortgage term. It revealed last month that the average charge has risen from 98 in 2003 to 184 last year.

Boulger says: “An exit fee is just one part of the deal so if the mortgage is good value, then the size of the fee is not so important.”

The Mortgage Practitioner sole trader Danny Lovey says: “It is now clear that the day of reckoning is near for lenders who charge disproportionate deeds release and administration charges relative to the actual cost.

“In the spirit of treating customers fairly, this issue is now going to be the watershed. We will find out if the FSA is prepared to put the consumers’ interests first and gain the respect of the market by heavily fining those who have blatantly gone against the whole sprit of treating customers fairly. If lenders are not brought to heel, nobody will have any confidence in the FSA.”


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