Analysis from mform.co.uk has shown that borrowers could stand to lose as much as £750 on a £150,000 mortgage application.
Non-refundable fees are increasingly being introduced as lenders look for new ways to maintain revenue following action by regulators against so-called exit fees.
Lenders including Cheltenham & Gloucester, Britannia, Yorkshire Building Society, and Nottingham Building Society currently have non-refundable elements to fees on some of their mortgages. The fees range from around £65 to 0.5 per cent of the advance.
Lenders justify the fees on the basis of covering their costs in processing applications and reserving preferential rates. Borrowers who go on to take the mortgage will not lose out.
Eamonn Rice, mform.co.uk’s chief executive, said: “The picture on fees is becoming more and more confused and the issue of non-refundable fees adds to this.
“Most borrowers will be unaware of whether fees are non-refundable and many will never be affected if their loan goes through. Lenders will argue that the non-refundable fee is justified and that it only applies in very limited circumstances.
“All of that is true but none of it will be relevant or any comfort to a borrower who has to pay a non-refundable fee for a mortgage they do not get. Losing £750 is a serious blow to most people’s finances.”
Cheltenham & Gloucester’s non-refundable fee is £99 and is valid for 12 months. This means the borrower can reapply if the application falls through.
Britannia Building Society charges a non-refundable arrangement fee of £100 while Nottingham Building Society charges a non-refundable administration fee based on the purchase price starting at £65 and rising to £80.
Yorkshire Building Society charges a non-refundable fee which is 0.5 per cent of the advance. It applies on 4.99 per cent fixed rate product.
