Non-refundable up-front fees are creeping into the mortgage market, and potential borrowers should exercise caution, warns John Charcol.
According to Charcol, Abbey has now introduced a non-refundable fee of £150 on its mortgage range. Previously, only Lloyds TSB charged such a fee, set at £99, but Charcol expects more lenders to introduce the charge in the near future.
“This is just another step in the complete about turn in the mortgage market from just a year ago,” Drew Wotherspoon, communications director at Charcol, says.
“Consumers have been king for many years now, with lenders fighting for their business, often at loss leading rates, but that has been consigned to history and these booking fees are another stark reminder of that.”
Charcol says many factors can lead to borrowers being unable to complete their mortgage applications, many of which are directly down to the lender, yet they now face the prospect of losing cash because of factors out of their control.
“It's just another thing to think about in a market that is becoming increasingly challenging for all types of borrowers,” says Wotherspoon.
“The case for seeking advice, that seems to be gaining momentum, is only going to become more apparent with moves like this.”
However, Abbey says the upfront fee is necesarry for customers to secure specific rates in a rapidly changing environment and is refundable unless the customer pulls out.
A spokesman for Abbey says: "The total booking fees are not increasing and only a small proportion of the fee (£150) is required upfront.
"This upfront payment has become more necessary in the current economic climate and guarantees the rate for the customer. This fee is refundable if the application is declined."
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