Lenders add charges for missed mortgage payments
Published On 5 September 2007
Missing payments on a mortgage and going into arrears could cost homeowners more than they expect, a new report has warned.Consumer website moneysupermarket.com has discovered that a selection of the leading mortgage lenders in the UK have introduced punitive charges for customers who slip into arrears.
However, the study uncovered large differences in the charges levied by different mortgage lenders. For example, Northern Rock and Accord give borrowers a one month grace period if they miss a payment, while GMAC immediately charge £50.
Furthermore, Coventry Building Society charges £20 for a returned cheque or direct debit - while Halifax and BM Solutions charge £35.
"While I would not condone missing a mortgage repayment often financial hardship is caused by circumstances outside the control of the borrower, such as a relationship split," Louise Cuming, head of mortgages at moneysupermarket.com, commented.
"It is fair to say those in the unfortunate situation of going into arrears can expect to face some highly punitive and unjust charges.
"We must question if these lenders are 'treating customers fairly' given the inconsistency of the penalty fees charged."
The report highlighted some charges which the website felt were particularly unfair. These included a fee of £35 for every letter or call regarding arrears sent by Halifax and the £100 charge for debt counselling charged by Halifax and GMAC.
Figures from Credit Action show that the average person in the UK now owes £56,000 when mortgages are included.
