The recent debate over mortgage switching fees is set to rumble on after Nationwide was criticised for insisting that customers looking to change deals must first pay new product reservation fees, which can be as high as £1,999.
The news follows criticism earlier this week over Abbey's decision to implement a £199 fee for customers who wish to switch to another product.
Commenting on Nationwide's policy, Darren Cohen, mortgage planner at broker LRG, says the product switching fees were currently a hot topic for debate among brokers.
He adds: "It depends very much on how lenders want to position themselves. As the likes of Halifax and Northern Rock do not allow it at all, advisers may well recommend other lenders to clients."
"I think Nationwide charging the full product fee for a switch is a bit cheeky as you could potentially have to pay over a thousand pounds for some products. When you tell clients that they could be charged that kind of money to switch products they will shy away from taking the deal," he concludes.
Responding to criticism of the policy, a spokesman for Nationwide says: "This ensures we only allocate funding once a borrower has demonstrated a commitment to take a particular product, and enables us to manage our business in a prudent and responsible way."
However, not all brokers were quick to condemn Nationwide, with Jonathan Cornell, managing director of Hamptons International Mortgages, insisting Nationwide's policy was "nothing new", adding that the lender has always been up front with the charge.
Cornell explains: "If it means borrowers will save money after switching and paying the new product fee then it is still worth switching, it is simple maths."IFAonline
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