Peter O’Donovan, mortgage manager at Bestinvest, said that the practice by the lender flouted ‘Treating Customers Fairly’ (TCF) guidelines, and was a practice that no other lenders employed.
He said: “Abbey charges an ‘exit’ fee when redeeming a mortgage. This is normally charged when a client moves the mortgage or pays it off.
"The client is in the middle of a decent rate with Abbey and is purchasing a new property. Rather than redeem the existing mortgage he is porting it across to the new property and borrowing a bit extra on existing rates.In all other cases where a mortgage has been ported, the exit fee is not charged by the lender or is refunded.
"I spoke to Abbey and it said as the existing product is closed and a new one opened on the new property, it classes that as redeeming the mortgage. Abbey is penalising the client as he is not redeeming the mortgage as far as he is concerned.”
An Abbey spokesman said: “Abbey charges a mortgage account fee (MAF) of £225. The fee covers the cost of providing, maintaining and administering the mortgage.
"As the customer is porting their mortgage, they will be moving to a new security and with some additional borrowing. Payment of the MAF covers the costs of providing the mortgage to date and these will include the additional costs incurred through the porting process. A new MAF will apply to the new contract that the customer enters into with us.
“We stand by our position and the fee does not contravene TCF principles as it is justifiable against our costs, clearly explained in our customer literature and detailed in our terms and conditions.”
