| Several high profile mortgage lenders have begun to | | | | charge their customers extra fees on high |
| revolt against higher lending charges and chastise | | | | loan-to-value mortgages have begun to criticise those |
| those who impose them on their customers. | | | | that do. |
| A higher lending charge (HLC) is a fee charged that a | | | | Various parties within the mortgage industry, including |
| mortgage lender will charge to a borrower if the | | | | many brokers, are backing mortgage lenders who do |
| loan-to-value ratio on their mortgage exceeds certain | | | | not apply Higher Lending Charges. This is because the |
| percentage. Higher Lending Charges are also known | | | | charge is levied on borrowers who cannot afford a |
| as Mortgage Indemnity Guarantees (MIGs). | | | | large deposit. These borrowers, therefore, can least |
| The money collected from the higher lending charge | | | | afford to pay an additional fee when securing a |
| is usually used by the mortgage lender to purchase | | | | mortgage. |
| an insurance policy that will protect them against the | | | | Mortgage brokers are arguing that because Higher |
| borrower potentially defaulting on the mortgage. | | | | Lending Charges are levied upon borrowers that are |
| Higher Lending Charges have been criticised in the | | | | already considered to be high risk, it makes little |
| past for not offering borrowers any protection. The | | | | sense to place an additional burden upon them. |
| insurance policy will reimburse the mortgage lender | | | | Mortgage lenders who do charge the fee insist that it |
| for the outstanding balance of the mortgage and any | | | | is not hitting borrowers who can least afford it and |
| mortgage arrears incurred if the borrower defaults. | | | | the fee can be added to the loan balance, thereby |
| However, this does not release the borrower from | | | | eliminating the need for borrowers to pay for it |
| their liability as the insurance company will pursue | | | | upfront. |
| them for the funds instead of pursuing the mortgage | | | | If you are looking for a mortgage to buy a property, |
| lender. | | | | or if you are looking to remortgage a property you |
| While some mortgage lenders have stopped applying | | | | already own, ask your mortgage adviser if the |
| Higher Lending Charges, many have not. This has | | | | mortgage lender they recommend will levy a Higher |
| caused a rift between institutions with different | | | | Lending Charge before you sign on the dotted line. |
| policies as the mortgage lenders who choose not to | | | | |