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Lenders face huge bill for exit fees

Mortgage lenders face paying out hundreds of millions of pounds in customer refunds in an FSA crackdown on exit fees.

The regulator last week ruled that lenders can only increase their exit charges during a contract term if they can justify the action and should compensate those previously charged more than their contract stated.

Alliance & Leicester, which charges a high exit fee of 295, has said it will no longer raise its charges during the term of a contract.

Lenders have already been besieged with calls from borrowers demanding their money back. Brokers are also likely to be inundated with calls.

BM Solutions says its call centre has been bombarded with people confusing exit fees with early repayment charges.

Chase de Vere Mortgage Management director Nick Gardner says: “Exit fees are a comparatively small charge for people with equity. A more serious issue is higher lending charges as they can be thousands of pounds for people who are not yet on the housing ladder.”

Council of Mortgage Lenders spokesman Bernard Clark says: “It is a matter for individual lenders to decide their course of action.”

See our Mortgage View – ‘Borrowers in a fix on rates’


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