Virgin Money announces new mortgage fee just after Chancellor launches investigation into mortgage fees
Looks like Virgin Money missed the memo about mortgage fees. Just as the Chancellor launches an investigation into sneaky fees levied by mortgage lenders, Richard Branson’s company announces a new £50 fee for having the audacity for leaving Virgin Money. Still, at least they are being up front about it.
The Council for Mortgage Lenders (CML) has been charged by George to work with our ranty friends over at Which!!! to investigate the mortgage market with the aim of making charges more transparent after Which!!! research revealed that home buyers can face more than 40 layers of hidden fees New measures are scheduled to be brought in by April 2015.
The CML says: “Although the FCA rules on the presentation and transparency of cost information are comprehensive, consumers do not always find the cost disclosure easy to understand.”
The six-month project will consider transparency and presentation of fees; the standardisation of terminology; consumer education; and setting administrative charges so they reflect the cost to the lender.
It is therefore something of a surprise for Virgin Money to announce the introduction of an exit charge for borrowers who want to move to a better deal just days after the Chancellor’s announcement. Although existing Virgin mortgage customers will not be affected by the changes, new customers will be charged £50 when moving their loan to a new home (known as porting) or switching to a different bank. The charge will also be levied when a customer pays off their mortgage- unless they take a new deal at Virgin
It’s not that other lenders don’t have similar fees- Nationwide, Halifax and Santander all have exit fees- but these are largely payable at the end of a mortgage term. However, Virgin Money would argue they are merely fulfilling the Chancellor’s brief by being up front about charges that are to “recover the administrative cost incurred by Virgin Money”. And least you now know they are going to hit you with an extra charge before you sign on the dotted line, so you can choose to take your business elsewhere…