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Ecology say lenders not playing fair

Posted: 05/04/2007

Recent reports have revealed that mortgage application fees have nearly doubled since 2004. Not so at Ecology Building Society, where the application fee for all residential mortgages is a mere £150 and has been for more than five years.

Many lenders’ exit fees have come in for criticism from the Financial Services Authority for being unnecessarily high, but some resulting reductions have been quietly recouped by more increases in application fees. In contrast, Ecology’s exit fees have remained just £75 for nearly 10 years.

The best buy mortgage tables help lenders disguise their mortgage application fees, which are often hundreds and in some cases thousands of pounds. The tables are based on the introductory interest rate only and not on the true cost of the mortgage over its lifetime. It would be fairer to potential borrowers and provide a more transparent comparison if the tables were based on the true cost of a mortgage over a period of years, taking into account all charges and fees incurred.

Often the interest rates published in these tables are short-lived, designed to lure new customers, with the rates increasing steeply after the introductory period ends. Ecology Building Society’s residential mortgages on the other hand are completely different as they commence on the Standard Variable Rate and then reduce after two years when a long-term discount of 0.25% is applied, so there are no nasty surprises.

Other applicable discounts, such as the 1% C-Change discount, also endure for the life of the mortgage.The C-Change mortgage discount,launched in October 2006, is believed to be the UK first and only mortgage product to directly encourage the installation of carbon saving technologies.

The C-Change discount is a 1% discount off the SVR on funds used to install qualifying energy saving measures and renewable energy systems. The discount is available to new and existing residential owner occupiers. The C-Change mortgage brochure can be viewed and downloaded from www.ecology.co.uk

The Ecology’s Chief Executive Paul Ellis feels passionately about the duplicity of some high street mortgage lenders. "We call on the Financial Services Authority to look at the role best buy tables can play in ensuring transparency in the mortgage market. There are no free lunches when it comes to mortgage deals, as consumers are finding out".

"Our mortgages first and foremost provide long-term value to our borrowers, so we are not interested in attracting new business with gimmicky upfront deals that don’t last. Nor do we feel the need to charge the unjustifiably high fees that some lenders impose as they cannot retain their borrowers once the deal rate ends. The majority of our borrowers are with us for the long term."

Ecology Building Society specialises in providing mortgages for properties which provide an ecological payback, such as:
*the renovation of run-down, derelict dwellings
*the conversion of disused buildings such as windmills, barns, lighthouses, shops
*eco new-builds incorporating sustainable, natural building materials, high levels of energy efficiency and renewable energy systems
*properties of unusual construction, especially timber
*energy efficiency improvements for existing properties

Part-residential and commercial mortgages are available for projects and properties which offer social and/or environment benefits. The Ecology’s range of green savings and investments supports its unique lending programme.

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