When you ask for a redemption statement from your mortgage lender, it can come as an unpleasant surprise to see an additional charge termed ‘mortgage exit administration fee’ (MEAF), which, whilst it would have been included in the terms in the mortgage offer letter, is something most borrowers will have forgotten about. These charges can add significantly to the cost of switching mortgages.

It is estimated that the average mortgage redemption involves the lender in a paperwork exercise that costs somewhere in the region of £50, although MEAFs of over £200 are common.

Some time ago, the Financial Services Authority (FSA) reviewed these charges and concluded that some of them are a breach of the Unfair Terms in Consumer Contracts Regulations 1999. In 2007, it issued a statement of practice to mortgage lenders and there is a page on its website http://www.moneymadeclear.fsa.gov.uk/news/product/unfair_contracts/unfair_exit_admin_fees.html setting out the approach it expects lenders to take.

The FSA has given the following advice to borrowers:

• If you think you have been charged a higher exit fee than the fee stated in your mortgage contract, contact the lender to find out if you are eligible for a refund of the difference. You may not need the original mortgage documentation to claim. If you give your name and the address of the property, the lender should be able to find your details;

• If you are a new borrower, you should be told at the outset what exit fee you will pay or you should be given a clear idea of how the fee might be increased fairly. This will allow you to make an informed decision about which mortgage product is best for you; and

• Check all the mortgage fees as well as the interest rates when comparing mortgages. Consider what impact the fees will have on the overall cost of your borrowing.

The consumer website MoneySavingExpert http://www.moneysavingexpert.com/reclaim/mortgage-fees supplies standard letters to use when seeking refunds.