Mortgage exit fees explainedExit fees explained

Mortgage exit administration fees (MEAFs) – or mortgage exit fees for short – are charged by lenders when you change mortgage contract. If, for example, you switch providers at the end of a fixed-rate period, or you pay off your mortgage, you’ll probably have to pay an exit fee. According to lenders, exit fees cover the costs of things like releasing the deeds to your house.

Exit fees are different from early repayment charges, which you’re landed with if you pay off your mortgage before the end of a set period.
Unexpected increases in exit fees

Fees to exit your mortgage should be proportionate to the real admin costs.

Some lenders have been increasing exit fees on existing mortgages – so you may be charged more when you exit the mortgage than it showed in the contract at the time you signed it.

If you think that isn’t fair, you’re not alone. The Financial Services Authority (FSA) concluded in June 2006 that some lenders might have increased their fees unjustifiably. It then launched an investigation into the increases of exit fees and whether they complied with the Unfair Terms in Consumer Contracts Regulations 1999 (UTCC).
Fair fees

The FSA has said that mortgage lenders should charge customers either no fee, or the original fee in the contract. If they want to charge a higher fee, they need to justify it.

Changes in costs associated with deed release fees, Land Registry charges, staff processing and a reasonable proportion of general overheads can all be included in a fee increase, but the FSA has been clear that other costs, such as marketing, loss of profit on lending or costs of arranging or running the mortgage, cannot.
Challenge your lender

If you’ve paid a fee in the last six years that was higher than the original fee in your mortgage contract, we think you should challenge your mortgage lender.

As with unfair bank charges, we also believe that if the fee was disproportionate to the real costs of administration of the exit from the mortgage then you should challenge it, even if it had not risen since the original contract.