Inflation may have been increasing on a year by year basis, but it can do nothing to explain why exit fees on mortgages have increased by up to 450% in the last 3-5 years.
Mortgage lenders charge an exit fee to borrowers that pay off or leave their mortgage early – also known as a redemption charge. The Financial Services Authority (FSA) previously left them to it but has now realised that they need to put an end to these increases.
When a borrower signs up for a mortgage, the lender, by law, has to inform the borrower of the exit fee. However, lenders are allowed to increase these charges without telling the borrowers, which is exactly what they’ve been doing. Why not – it’s free money!
We have a few examples which illustrate the issue perfectly. The Cheltenham
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