If, after a few years of taking a mortgage you choose to pay it off or switch to another provider, you will be charged a fee. This is commonly known as a Mortgage Exit Fee and is seen as a penalty for early release or early redemption. It is said to be a necessary charge to cover staff, legal and administrative costs etc. There can be little argument against such a method of charging if the exit fee is fair and levied to cover costs of general paperwork and administration. However, it is evident that lenders and mortgage providers are charging exit fees which are unreasonable and unfair. The fee penalty is much higher than the actual cost incurred or in the implied term of contract. Some lenders in the UK have charged almost three times the amount of what would be classed as a ?fair? charge and a recent example is the Alliance and Leicester building society which imposed a mortgage exit fee of almost ?300.



What is Mortgage Arrears?

It is a common tale that many people fail to pay their mortgage repayments due to personal problems or financial constraints. Emergency and unexpected commitments can often throw a scheduled repayment plan into complete chaos. In such an eventuality lenders often impose heavy penalties or even may go to the extent of repossessing your home if repayments are repeatedly not met. If you have difficulty paying your mortgage due to any reason, it is vital to talk to the lender and negotiate the mortgage or arrange a payment plan. Failure to keep up repayments would almost certainly result in heavy penalties which are slapped on to cover the administration costs of arranging paperwork and handling other matters. Naturally, the lender is entitled to charge for drafting a letter or making a phone call but to charge ?30-?40 for simply giving you the joyous news that you that you are behind with your monthly repayment is nothing short of scandalous. Consequently, these charges add up over time and can worsen the financial situation. Home owners head deeper into debt trying to keep heads above water and there is no doubt that additional penalties simply add more salt into the wounds.

How to claim back?

The Financial Services Authority declared that such charges are unfair and highly excessive. The basis of such findings are based on the same lines as unfair bank or credit card default charges which the Office of Fair Trading (OFT) has concluded are legally unfair in terms of the Unfair Terms in Consumer Contract Regulations. In other words, a charge will not be fair if it exceeds a lender's actual administrative costs. For years, people have simply taken additional charges and penalties on the chin and swallowed the pain. It is vital that consumers fight for their rights and ask for a refund of penalties and all charges. You can claim back these unfair charges yourself but there are always pitfalls in trying to fight big financial institutions with standard complaint letters. In such cases it is always worth seeking professional help from claims specialists who understand the way to get past the stubbornness of compliance officers who will naturally defend claims. Consumers who have their claims rejected should remember that there is also Financial Ombudsman Service (FOS) which adjudicates on disputed claims. However the FOS will not assist consumers present their cases. How you put your argument is very much down to you and once again it might be worth having specialist help to undertake all the necessary work. Unlike bank charges, it is possible to claim back mortgage penalties going as far back as 12 years. (as opposed to 6years on bank charges). Even if you no longer have a mortgage or have changed lenders they can still be claimed back. Consumers have had a rough ride for years and had enough punishment inflicted on them. So why are you waiting? It is your money and it is definitely worth fighting for.