Mortgages Uncovered

Britain’s 6th largest mortgage lender came under fire last night after the introduced a £150 penalty for any customers who intended to back out of a mortgage deal after it had reached the approval stage prior to completion.

On average, one in five people who apply for a mortgage will back out of a deal, the bank declined to give any further information or figures regarding the penalties.

Woolwich is also set to assess the fee should applicants make any mistakes on their mortgage application forms should it mean that the form is rejected or provide information that does not check out and delays the application.

Woolwich is owned by Barclays and a spokesperson for Woolwich:

“We have worked hard to ensure this charge is the fairest solution so we will not charge a customer where the mortgage does not go through at no fault of the customer. This change makes it very transparent, as customers will know that if they do not proceed with a mortgage application, they have to pay the withdrawal fee but any application fee is fully refundable.”

Cheltenham & Gloucester has levied a £99 fee for those customers who back out of their mortgage applications following approval and Abbey, Britain’s second largest mortgage lender, has now introduced a £150 charge from June 2008 but withdrew it in December.

Ray Boulger, of John Charcol, the broker, said: “This fee is to recoup costs and discourage borrowers from shopping around. A fee, however nominal, requires more thought and commitment from a customer – however, I’m not convinced that it will stop people switching. But at least Woolwich will be compensated.”

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