Four Steps To Reduce Mortgage Exit Fees

More nasty charges! This time it's mortgage exit fees that we put under the hammer, with four steps to reducing them.

Recently I feel like all I'm writing about is how to tackle unfair charges by the nasty, big financial companies. So I guess there's no reason why today should be any different! We wrote recently about the increasing costs of mortgage exit fees. We showed that one provider's charges have gone up 350% in five years. If you took out a mortgage in 2001 expecting to pay £50 for leaving your mortgage lender, you might now have to pay £225!

Mortgage companies get away with this by indicating in your contract, or in supporting documentation, that the fee might vary. However, if they abuse such loose wording like this you should think seriously about complaining. Here's what you could do:

1. Get nagging!

To challenge the fees, you should enquire with the company straight away to give them a chance to put things right. Keep a record of all the conversations you have, and the letters you send and receive. Give them up to eight weeks to resolve the complaint.

The company should send you a letter stating its final decision and telling you how to contact the Financial Ombudsman Service if you're not happy with its decision.

2. A nice big organisation - the Financial Ombudsman Service (FOS)

If the company fails to reduce the fee to what you consider to be fair, you should complain to the Financial Ombudsman Service, who can direct it to award you restitution.

Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
London
E14 9SR
Tel: 0845 080 1800
enquiries@financial-ombudsman.org.uk

Include in your letter:

• A copy of your contract;
• An explanation of which part of it you think is unfair and why;
• Details of the discussions you have had with the company, plus appropriate copy letters.

3. Another big organisation - the Financial Services Authority (FSA)

You could also report the unfair contract terms to the Financial Services Authority (FSA). They can't obtain redress for you specifically, but they can challenge companies that are using unfair terms, even to the point of getting a court order to stop them using it if they think it causes a disadvantage to lots of customers.

For example, one company had a term saying that they could increase a charge to consumers for 'valid reasons'. The FSA recently ruled that they had to specify what the valid reasons were and, as a result, the company deleted the term from the contract.

Consumer Protection Powers Team
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS.

Send the same details to the FSA that you would send to the FOS.

4. Don't be frightened of the C word.

You could take your case to court instead of going to the FOS or, if you go to the FOS and you disagree with its decision, you can still take the case to court. Of course, there are no guarantees you'll win. Plus, if the FOS has got you compensation and you've accepted it, it's highly unlikely you'll get further compensation in court.

Very rarely the company, for whatever reason, may refuse to pay an award made by the FOS. To enforce the award you have to apply to a court. The FOS may refer the case to the FSA for enforcement action against the company, but this may not result in you obtaining redress.

So watch out for these fees in all their guises: exit fees, redemption administration charges, sealing fees, deeds-release fees or simply 'administration charges'.

If you haven't switched mortgage for a couple of years, it's likely you're paying thousands too much! Compare mortgages and switch.