It will cost me £295 to switch mortgages - is this right?

Q I am about to switch mortgages as I have reached the end of my two-year discounted period with Alliance & Leicester. I was shocked to discover from my solicitor that A&L expect me to pay £295 in redemption charges.

Looking through the original paperwork there is no mention of any charge, although a leaflet was sent to me last year which, in very small print, announced they were introducing an early closure administration charge of £195 for customers redeeming their mortgage before the end of the mortgage term. I assumed this was for new customers and not existing customers who had taken on the mortgage without agreeing to such terms.

To make matters worse this figure has now gone up by £100 in a year. I wrote to complain and have received a response stating they are prepared to reduce the fee to £225 "as a gesture of goodwill," but I still don't think this is acceptable and can't see how they can justify this figure for what is a very simple administrative task. Would the ombudsman take on such a case or would you advise that I accept their offer?

BM

A Well, I've had a word with the Alliance & Leicester and it turns out that - in common with many other mortgage lenders - there has always been an administration charge for customers who pay off their mortgages before the end of the mortgage term.

At the time you took out your mortgage, the fee was £160 which then went up to £195. The fee has changed its name from "early closure administration charge" to "redemption administration charge" to avoid confusion with early repayment charges for customers who leave a special deal before the end of a tie-in period and which can amount to several thousands of pounds.

The hike in cost from £195 to £295 of the newly-named redemption administration charge can be explained by the fact that it now includes other administration charges which were charged for separately before the name change.

But whatever the name of the fee, you should have been told about it - which can include a reference to it in any leaflet you may have been given when you took out the mortgage. If you are convinced that Alliance & Leicester has treated you unfairly and/or any mention of an administration charge for early redemption is news to you, yes you can take your case to the Financial Ombudsman Service (www.fos.org.uk) but only once you have exhausted Alliance & Leicester's own formal complaints procedure that they must tell you about if you ask.