Forum Brief: Mortgages

Mortgage lenders are still trapping unwary consumers through several unfair practices, Which? has reported.

Forum Response: Consumers' Association

Malcolm Coles, editor of Which?, said: "There's no excuse for the mortgage lenders still to be trapping people in these underhand ways. When we contacted those who charge interest until the end of the month, none of them offered much justification - according to Bradford and Bingley, 'It's just the way it works'. This just isn't good enough.

"Meanwhile, Which? will carry on campaigning to get the industry to clean up its act."

Forum Response: Nationwide

A spokesman for Nationwide said: "Nationwide stopped charging its equivalent of MIG (Scheme for Maximum Advances) over three years ago (September 2000). Some providers (such as Abbey and Halifax) charge first time buyers MIG, adding thousands of pounds to the cost of a mortgage at the very time that a first time buyer needs to make every pound count.

"Even when customers try to leave their current mortgage provider, some lenders still impose further fees and charges. In addition to early repayment fees that are typically associated with special rate deals, it is common practice to charge customers to leave. Abbey, for example, charge a 'Deeds fee' of £99 and a 'Discharge fee' of £80 giving customers a £179 sting in the tail when they leave. Not many customers will consider, or even notice these fees when they agree to take the original mortgage. Nationwide does not charge these fees.

"In May 2001, Nationwide moved all existing borrowers automatically from annual to daily interest as this is a fairer way of calculating repayments."

Forum Response: Council of Mortgage Lenders

A spokesman for the Council of Mortgage Lenders said: "None of the fees or practices mentioned by Which? are universally adopted by the mortgage lending industry.  Each lender will offer a range of mortgage products which have different terms and conditions to suit the needs of different borrowers.  When choosing a mortgage, consumers need to consider the overall deal and not simply the headline rate of interest."