Mortgage Exit Fees

Mortgage Exit Fees or Mortgage Exit Administration fee (MEAF) as they are officially known, are a charge incurred when you finally get to that lucky moment when you fully pay off your mortgage. The MEAF is to cover general administration costs of ending your mortgage, including staff and legal costs and changing the property registration details with the Land Registry, so the property bears your name.

Mortgage Exit Fees are also to be paid if you ever switch your mortgage lender, as effectively you are paying off your mortgage - even though you are only able to do it because you are taking on another mortgage, the charge still applies. MEAF's are known by many other names including Final Redemption Fee, Discharge Fee and Deed Release Fee to name a few. However they should not be confused with the term Early Redemption Fee which is a charge incurred if you pay off or change you mortgage during a certain special offer you have signed up to, such as a certain fixed rate over a specific period of time.

It has become apparent over the past couple of years that mortgage lenders have been increasing their MEAF charges. The reason why? With increased competition in the mortgage market, lenders were offering cheaper deals on mortgage products including lower interest rates. However, they needed to still make this money up elsewhere, hence the hiked up Mortgage Exit Fee which most people either didn't notice, or felt it wasn't worth worrying about. Unfortunately some people have ended up paying a higher MEAF than was originally stated in their contract. In January 2007 the FSA, Financial Services Authority, announced that those customers who had charged more than they should have were entitled to get a refund for the difference.

Most lenders seem happy to refund the difference - not that they have a choice anymore - but they aren't doing it unless the customer actually asks for it back. Some people are even requesting a refund for the interest they would have lost out on too.

Once upon a time MEAF's cost around £50 but 10 years on they average around the £200 and £300 mark. The FSA have now made all lenders justify these fee increases, as in theory it shouldn't cost the company much more than £50 to transfer the property details anyway. Since this justification process was announced in July 2007 many lenders have reduced their fees or even dropped them altogether in some cases. The mortgage exit administration fee should now be completely transparent to the borrower, they will know exactly how much they will need to pay at the end of their mortgage term.

Mortgage Application Fees may also go a similar way, as they have doubled, tripled and in some cases quadrupled in price in just a few short years. It is always worth finding out the cost of all the charges you will incur on your mortgage before, during and after to make sure you don't get any nasty surprises and are not over-charged from the beginning.