Banks in the United Kingdom have been accused of using a mix of 40 different levies in a bid to saddle borrowers with fees, according to the Telegraph; fees that have double in the past five years to 1,600 pounds (almost $3,000 Canadian), according to recent research.
“The complex range of fees and charges prevent people from finding the best deal as the total cost is not clear," Richard Lloydm, executive director of Which? – the organization responsible for unearthing the trend – told the Telegraph.
According to Which?, the list of 40 different fees include:
- "administration fees"
- "application fees"
- "assessment fees"
- "arrangement fees"
- "booking fees"
- "product fees"
- "reservation fees"
- "lenders' fees"
- "completion fees"
- "mortgage questionnaire fees"
“Early exit fees” are common in Canada and brokers warn clients beforehand about potential extra fees that will be incurred if borrowers choose to switch mortgages. Still, the transparency with which these fees are communicated by banks has confused and shocked clients recently.
In early October, one Canadian couple was shocked when they were saddled with a $17,000 penalty by their lender after exiting their mortgage.
Shane and Joy Trusz, an Edmonton couple, knew they would be dinged with a penalty and expected to pay the equivalent of three months interest -- $4,000 – but were surprised when TD Bank charged them a much bigger figure, according to CBC News.
“We came out with a figure, it was about $7,000,” Shane Trusz told the CBC. “So, how is TD coming up with $17,000? I have no idea.”
The contract with TD stipulates that the bank will charge an early exit penalty of either three months interest or the Interest Rate Differential.
The bank eventually waved the fee.
Canadian brokers and mortgage borrowers are always leery of hidden mortgage fees, but one trend occurring across the pond will shock and surprise industry vets.