Inconsistent penalty fees for mortgage payers

05 September 2007
An alarming number of punitive charges associated with missing mortgage repayments has been uncovered by Fees were also shown to be inconsistent as a result of the company’s research. believes the disparity between different companies’ rules is unfair. It reveals that, while Northern Rock and Accord offer a month’s grace for a missed payment, GMAC automatically charges £50. Furthermore, Coventry Building Society charges £20 for a returned cheque or direct debit, while Halifax and BM Solutions charge £35.

Head of mortgages, Louise Cuming, said: “While I would not condone missing a mortgage repayment, financial hardship is often caused by circumstances outside the control of the borrower, such as a relationship split.”

She points out that, although those who default on payments should expect some kind of charge from lenders, adding to the debt is unlikely to help either lenders or borrowers when it comes to making future payments.

Ms Cuming suggests that lenders “assess each situation on an individual basis and make moves to help them repay the money they owe when appropriate.”

Under the Mortgage Conduct of Business rules – regulated by the Financial Services Authority – all cases of financial hardship must be treated sympathetically.

However, some fees related to arrears do not appear to reflect any level of sympathy.

Some lenders offer no advice service for borrowers at all, while others charge up to £35 for each letter or call regarding arrears, and up to £100 for debt counselling.

Ms Cuming adds: “The biggest outrage is that some lenders even charge for debt counselling, which can be found free, for example with the Citizens Advice Bureau.”

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