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Failed mortgage applications to attract charges

Barclays Woolwich has today announced a new charge in relation to failed mortgage applications which is causing great concern within the industry. The industry standard at the moment is fairly unclear with some mortgage costs paid upfront and non-refundable while others are refunded if an application is turned away for any reason. However, Barclays Woolwich currently works on the basis that all mortgage fees are refunded if unsuccessful but a new cancellation charge of £150 is set to be introduced.

Many people believe this is nothing but a profiteering mechanism which is set to be used by other UK banks as they look to claw-back lost profit margin. While in many ways you can see why a bank would look to charge for failed mortgage applications, as they do take up a fair amount of time, it is worth remembering that the vast majority of UK mortgage holders will add their mortgage charges to their outstanding mortgage. This effectively means they will be paying interest on any mortgage fees for anything up to 25 years.

The next few months will see a number of changes in UK banking industry with experts adamant that we will see similar schemes which are effectively propping up banking company balance sheets at these most difficult of times.

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