Excess exit fees scrapped after consumer pressure

Excess exit fees for mortgage holders looking to switch, which had previously been levied by mortgage providers, are to be paid back, after consumer pressure and a ruling by the Financial Standards Authority (FSA).

Providers had presided over big increases in exit fees – with some doubling them in the last three years – for little extra cost incurred. This was seen as unfair by consumer groups.

The FSA, agreeing with customer complaints, had demanded that providers either justify the extra charges or return the difference, and set yesterday as a deadline.

Providers, after strongly resisting the ruling initially, have now decided to pay up on deadline day. Millions of customers will now get their money back.

Melanie Bien, at broker Savills Private Finance, told the Times that “Anyone who has remortgaged in the past few years… will be able to make a claim, depending on their lender’s stance.

“Lenders are concerned about the scale of claims they are likely to see regarding exit fees, which may be why borrowers will have to make a claim themselves, rather than wait to be contacted by their former lender”, she added.

Consumer groups will now look to their next battle, which will concern what are perceived as “excessive” overdraft charges from banks. A judgement from the Office of Fair Trading (OFT) is expected later this year.

Tags: borrowers, Mortgage-backed security, mortgage holders, battle, Mortgage loan

The end of loft conversions?

Builders are warning that a new government white paper, touted as making it easier for people to renovate their homes, will in fact make such work much harder.

The Federation of Master Builders (FMB) is warning that impact tests, included in the white paper, are likely to prevent mortgage holders from carrying out work such as loft conversions.

The white paper says that developments which have more than a “low impact” on the wider neighbourhood will need “specific planning permission from the local planning authority”.

This, says the FMB, could effectively spell the end of loft conversions.

“It is quite devious how the Planning White Paper has emphasised the removal of planning permission for home renovations whilst at the same time hiding the effective removal of permitted development rights for loft conversions,” said Brian Berry from the FMB.

“By applying the impact test to front or side roof extensions and to rear roof extensions that are less than one metre from eaves, ridges, verges or party walls, the proposal effectively wipes out all loft conversions in built up urban areas.”

Mr Berry went on to point out that loft conversions are becoming more popular among homeowners as it is often more financially viable to renovate a property rather than move house.

Tags: low impact, government white paper, neighbourhood, planning authority, house, development

Brits spend billions on conversions

British homeowners have spent over £90 billion on converting ‘dead space’ in their homes.

Research by AA Financial Services shows that 20 per cent of mortgage holders have converted attics, garages, cellars and sheds to make them liveable areas.

The main driving force for the majority of people was to increase the value of their property, with 27 per cent citing this reason.

Money appears to be a major factor when it comes to conversions, with 17 per cent of those asked saying that they would have preferred to leave the ‘dead space’ as it was but needed to room and could not afford to move.

Others though were simply keen to get the most from their property, especially as house prices continue to rise.

“Many homeowners relish turning unused or ugly areas of their homes into liveable rooms as it means more space for family and less dusty boxes and clutter,” said Janet Pell from AA Insurance.

“But it is important that you ensure you have the appropriate building regulations approval before going ahead.

“And make sure you update your home insurance cover following an extension or conversion – your three-bed cottage might suddenly become a four-bed house – and of course, you’ll have additional furniture and possessions too.”

It is worth noting however, that if your property does become a four-bedroom house, it will be subject to the new Home Information Pack regulations from August 1st.

Tags: possessions too."It, cover, cent, mortgage holders, home insurance

Credit card borrowing falling among homeowners

Rising base rates are causing a drop in borrowing by householders, according to a new report.

Homeowners who are already paying a mortgage on their home are becoming less willing to take up any more unsecured debt as they are beginning to feel the squeeze, a study by Alliance & Leicester suggests.

Commenting on the report, Chris Rhodes, director of retail banking at Alliance & Leicester, said: “Consumers have shown an unprecedented appetite to reduce their unsecured borrowing while their incomes have continued to grow and interest costs on their unsecured borrowings have fallen.

“This will have taken some of the sting out of the latest increase in base rates.”

Despite that increase, Alliance & Leicester’s report suggests that warnings of a return to 1990 levels of strain on UK consumers’ finances would be premature as the base rate would have to be hiked to 8.5 per cent before people would experience similar problems.

However, conclusions of the report are that, while UK consumers are still in the “comfortable” zone of debt, this position could be damaged if there are any more rises in the base rates of interest.

Other findings of the monthly report show that this unwillingness to take on more credit card or personal loan debt only applies to those with mortgages.

In contrast to a drop in debt of an average £197 among mortgage holders, those without a mortgage increased what they owe by £97.

Tags: Leicester's report, incomes, mortgage holders, zone, rate, Unsecured debt, study, conclusions