Mortgage Exit Administration Charges - Consumer Redress

When you ask for a redemption statement from your mortgage lender, it can come as an unpleasant surprise to see an additional charge termed ‘mortgage exit administration fee’ (MEAF), which, while it will be shown in the mortgage offer letter, is something most borrowers will have forgotten about. These can add significantly to the cost of switching mortgages.

It is estimated that the average mortgage redemption involves the lender in a paperwork exercise that costs somewhere in the region of £50, although redemption fees of over £200 are common.

Some time ago, the Financial Services Authority (FSA) reviewed these charges and concluded that some of these charges are a breach of the Unfair Terms in Consumer Contracts Regulations 1999.

The FSA's advice to borrowers was as follows:

• If you think you have been charged a higher exit fee than the fee stated in your mortgage contract, contact the lender to find out if you are eligible for a refund of the difference. You may not need the original mortgage documentation to claim. If you give your name and the address of the property, the lender should be able to find your details;
• If you are a new borrower, you should know from the outset what exit fee you will pay, or should be given a clear idea of how the fee might be increased fairly. This transparency and fairness will allow you to make an informed decision about which mortgage product is best for you;
• Check all the mortgage fees as well as the interest rate when comparing mortgages. Consider what impact the fees will have on the overall cost of what you will borrow.