Summary

Lenders publish their APRs so we can make an informed decision ( life insurance quotes ) on which mortgage to choose. But there are more charges being added on behind the scenes, and they're rising at an exponential rate, as this article finds.

Mortgages. Rising add-on charges beat inflation . Page 2

Author: Anna Richardson

It's the exit fees that lenders are focusing on as a new way

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Life Insurance News

to cash in on remortgagers. The increases are far above the rate of inflation, for example both Natwest and the Royal Bank of Scotland, big players in the mortgage industry, have put through increases of 125% on exit fees. They were £100, now they're £225. Barclays Woolwich were charging £195, now they've leapt up to £275. Halifax was charging £100, now it's £175. Nationwide have taken ( cheap mortgages ) notice too - they never even used to put a price on for people leaving their mortgages, now they have introduced an exit fee charge of £90.

Lenders are disguising these charges by using completely different terms for them - there are no standards terms so it's hard for customers to know exactly what they mean. We found that the same fee, an exit fee, was described by various different companies as: booking fee, product fee, application fee and completion fee. So it's hard for borrowers to compare like for like.

Because it is getting increasingly difficult for borrowers to ( personal loans ) make comparisons, we think the Financial Services Authority should interfere and force lenders to use the same standard terms. People are just getting confused with the current practices.

Nationwide Building Society has noticed: "The mortgage market has become ( cheap loans ) very fee orientated. Many larger banks are using fees to subsidise their lower rates. For example, many charge very high exit fees". However, it obviously feels that some kind of fee is justified as it has recently introduced one itself.

The Halifax denies that it's doing anything wrong with the following statement: "Our fees must be amended from time to time to reflect the rising processing costs". We ( life insurance advisers ) all know that inflation cannot explain the huge rises in its charges, both their arrangement fee and exit fees have increased by 25% and 75% respectively in the last two years. With an average rise of 50%, we would be interested to hear just how these kinds of rises can be properly justified.

Statutory Wealth Warning:
Your home may be repossessed if you do not keep up your repayments on a mortgage or any debt secured on it.