MEX under fire for product switch charges
Jason Richardson, director of YooToo Financial Services, was processing a mortgage application through the specialist lender, but wanted to switch products after the client saw a better rate with Mortgage Express a couple of days after his client’s mortgage offer was issued.
However, he was shocked to learn the charge would be the equivalent of £1,100 to switch between products, even though nothing had yet been finalised.
Richardson said: “Usually, you would just fax in the change to the lender so when MEX came back to me and mentioned the fee, I couldn’t believe it. I’ve never come across a lender charging for this, so I wasn’t expecting to pay anything. I can understand charging a small administration fee, maybe £100 or so, but to charge half a per cent is extraordinary. The client is also a first-time buyer so it’s really hitting him hard.”
The client wanted to switch from a five-year fixed rate at 5.19 per cent to a three-year fixed at 5.29 per cent.
A spokesperson for Mortgage Express said: “If a broker advises a borrower to switch deals after the first mortgage application has been drawn up and the lender has borrowed the agreed loan from the money markets, it is reasonable for the lender to charge a fee for cancelling. This is normal practice throughout the industry. We regularly review our fees to ensure we are competitive.”
Bob Sturges, director of communication at Money Partners, said: “Regardless of the product, changing would be the same amount of work on a £100,000 mortgage as it would be on a £200,000 so it should really be a flat fee.”