Mortgage redemption fees

Mortgage redemption fees

Before selling your house find out early from your mortgage lender if there are any fees to pay because mortgage redemption fees can be high. Then you'll know at what price you can afford to sell.  If you buy another house you might be able to change your original mortgage agreement accordingly but some mortgage companies will re-assess your mortgage and terms. You may also wish to change mortgage lenders at this time and redeem the existing mortgage.

     Redemption fee

Sometimes lenders charge an early repayment of redemption penalties, if and when the mortgage is settled early. The charge can be as high as 1 to 4% of the outstanding loan.  This fee may not apply if you keep your next house loan with the same company.

Mortgage exit fee

Mortgage lenders might also make a charge of an exit fee to cover administration costs 'mortgage exit administration fees' or MEAF's, if you pay off your mortgage early or switch to another lender for the next property. With such fees often hidden in the small print, many sellers often forget that this takes the mortgage debt a few thousand pounds higher," comments Ruban Selvanayagam of house repossession assistance company Property Solvers.

Reclaiming mortgage redemption fees

The mortgage redemption fee will have been detailed in your original mortgage loan arrangement documentation and vary considerably. In 2007 some Mortgage lenders put up their MEAF's and charged more than their original agreements. The regulator, the FSA announced in January 2007 that where customers were overcharged for their exit fee that they should be entitled to a refund. If you paid a higher fee than you expected you may be able to reclaim the Mortgage exit administration fee.

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