Simon Read: It's time lenders stopped flummoxing us with fees

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The Independent Online

Anyone who's taken out a mortgage lately will have been charged a fee. Fair enough, you might think; lenders have plenty of administrative paperwork to sort out – why shouldn't they charge for that?

However, the fee isn't there to cover a lender's costs, even though it's sometimes called an administration fee. In truth it's a shabby way of tricking borrowers into paying more for their home loan than they need to.

How do I know this? Lenders have freely admitted it to me.

They charge excessive fees so that they can lower the headline interest rate on offer. That helps push their deals up the "best buy" tables, which in turn allows them to attract more business.

In short, it's just another way to market their loans. But the net effect is confusion among borrowers. They rightly ask how it's possible that a loan with one of the lowest interest rates can be one of the most expensive deals?

Even when borrowers understand that they have to look beyond the headline rates to find the true cost of a mortgage, lenders try to confuse them all over again by dressing up these extra charges with ever-more confusing names.

The consumer group Which? reckons there are more than 40 different names for these lender charges. As well as the fairly standard "administration fees", banks are imposing "application fees", "assessment fees", "arrangement fees", "booking fees", "product fees", "reservation fees", "completion fees" and "mortgage questionnaire fees". There's even the ridiculously prosaic "lender's fees".

They're all designed to hide the true cost of a mortgage from us and, for that reason, should be banned. Borrowers should be quoted the true cost of a mortgage upfront so they can compare different deals.

It's time for the authorities to put a stop to these somewhat sneaky and unnecessary charges.

The news that former England goalkeeper David James has been forced to sell much of his memorabilia in a bankruptcy auction sounds fairly sad.

But going bankrupt no longer seems to carry the stigma it once did. Indeed it seems the preferred way for some, in effect, to wipe the slate clean and start again. Look at the reality TV star Kerry Katona who has been declared bankrupt twice in the last few years.

I've no real idea what situation has led David James into bankruptcy, but suggestions are that it relates back to his divorce and a number of failed investments.

My colleague, sports writer Sam Wallace, suggested in this paper this week that James is a generous man who has never been terribly clever with managing money.

But going down the bankruptcy route does appear to have become an easy option for many, and that strikes me as a backward step.

Our goal should be to deal with our debts, not be encouraged to wipe them out.

s.read@independent.co.uk

twitter: @simonnread

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