You might have heard of an exit fee. It is the charge that the mortgage lender makes a person pay if they want to get out of a money borrowing agreement before the end of the term. Another name for it is a redemption penalty.
Well mortgage lenders are making large amounts of money on these exit fees at the borrowers expense. In fact, as more and more people have tried to ditch their mortgage when a better deal comes along in the last five years, the money lenders have been increasing these exit fees by up to an unbelievable 450%. If you think thats a staggering fact, consider this: In some cases they do not even mention it to the borrower.
The Financial Services Authority (FSA), however, is taking a stand.
What it plans to do is strike up an agreement with money lenders during 2006 in an effort to make these outfits quote the exit fees at the beginning of any mortgage agreement. The price someone pays to get out of the mortgage will then be fixed for that mortgage term.
That is, the cost of exiting an agreement will be the same if you get out of a mortgage after three years or after eight years.
It is actually the case that when someone enters...
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