Illegal Mortgage Fees Still a Problem

A prepayment fee is a percentage of the loan amount put in place to assure that a property has time to increase in value prior to the owner selling it. Lenders will often offer a prepay fee in exchange for a lower rate to the borrower. If a borrower pays the loan off prior to that time being up (normally one, two or three years) then they have to pay a percentage of their loan.

An exit fee is different. The lender never offered a lower rate for a specific time the loan had to be held. Also, even if a borrower pays their loan off in five or ten years, the exit fee can be as much as 300 pounds. While a nominal fee has been charged for years when a loan is paid off, the fee has gone up to 10 times the amount it should be. Even mortgage brokers are starting to protest the fee in hopes that legislation will step in and regulate this “scandal.”