If you have paid a mortgage exit charge you may be able to reclaim the money back from your ex-lender. Theses days mortgage exit fees are charged under a number of different names, and the amounts charged similarly vary hugely.

When your lenders paperwork describes the exit fee as paying for “administration” or “the costs incurred by the lender”, then you might have a case for a refund. Your argument should be that the charges are in fact a penalty for exiting rather than a reimbursement of costs.

Ask your lender to detail how the costs have been calculated and see what happens. Someone from the Financial Ombudsman Service is reported as saying, “When people make claims for repayment of exit charges, it relates to the precise wording in their mortgage contract. If it states that their charge is based on the costs of administering the exit, then the lender should prove that this was the case.”

We understand that when claims are made on this basis, many lenders have simply paid out on a goodwill basis to end the complaint and avoid having to prove their costs.

A few years ago a large numbers of homeowners complained about the exit charges they had been charged. These charges came under scrutiny after mortgage lenders began increasing them part way through mortgage contracts. The Financial Services Authority effectively put an end to this practice by issuing guidelines to the mortgage industry. It said that lenders should not increase exit fees whilst the contract was still in place.