Businessman criticises plans to ban home loans exit fees

An expert has slammed the government's plans to ban mortgage providers from hitting consumers with exit fees.

John Symond, founder of Aussie Home Loans, told the Canberra Times that this step will only lead the banks to increase fees in other areas.

He claimed they will either add a $3,000 application fee to the cost of getting a mortgage or will increase interest rates by half a per cent.

However, a spokesman for the Treasurer Wayne Swan said financial institutions do not use exit fees to increase their revenue.

It was argued that the main goal is to "lock in customers", which may suggest that the ban will not force banks to raise the costs of getting a mortgage in other areas.

Aussies hoping to purchase their own house may want to head online to compare home loans to ensure they get the best deal available.

Some exit fees can be as high as $7,000, but these will be scrapped on all new home loans starting from July 1st this year, a move that Mr Swan has claimed will increase competition in the marketplace.

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