High Lending Charges and the Current Housing Market - Mortgages - News - Moneyfacts


High Lending Charges and the Current Housing Market

High Lending Charges and the Current Housing Market

Category: Mortgages

Updated: 31/10/2008
First Published: 03/11/2005

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Out of approximately 120 mortgage lenders in the UK, three quarters still charge a Higher Lending Charge (HLC).

Nationwide BS recently reported that 800,000 borrowers have paid one billion pounds in HLCs over the last five years.

The HLC offers a measure of protection to the lender if a borrower defaults on the mortgage, but it is important to emphasise that, although the customer has to pay the premium, it is the lender that benefits from any payout.

As well as this, the customer should be aware that the insurer could pursue them for reimbursement of any monies that have been paid out in respect of a lender's claim.

Rachel McKay, Assistant Head of Mortgages at Moneyfacts.co.uk comments: "With mortgage arrears and repossessions at low levels compared with the era of 'boom and bust', it raises the question as to why the majority of lenders are still charging HLCs.

"Whilst it is appreciated that the risk for the lender is greater with higher LTV advances, lenders can price their products accordingly, rather than the customer, in many instances a first time buyer, being faced with a hefty upfront fee of £1,500 or more at a time when they can ill afford it.

"With either a rising or stable property market being the norm in the UK in recent years, it would be interesting to know how many claims have been made against what appears to be a somewhat outdated form of insurance."

Lenders that don't charge a High Lending Charge
Buckingham BSIrish Permanent
Cambridge BSKensington Mortgages
Capital Home LoansLloyds TSB
C & GMarket Harborough BS
Co-Op BankMonmouthshire BS
Coutts & CoMortgage Express
Cumberland BSNational Counties BS
Derbyshire BSNationwide BS
Ecology BSNewbury BS
EggNorthern Rock
First DirectPru Banking
Future MortgagesScottish Widows Bank
HSBCStandard Life Bank
Heritable BankThe One a/c
Hinckley & Rugby BSUCB Homeloans
IFVernon BS

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Londoners could be saving for a century to buy

We all know how expensive property can be in London and how tricky it is to get on the ladder, but the figures could still come as a shock, with a study finding it could take more than a century for the typical Londoner to save a deposit.

85% of remortgagors benefit from lower rates

Mortgage rates are among the lowest ever recorded, and in the case of fixed rates, they just keep falling! This means it’s never been cheaper to fix your mortgage rate for the long term, and unsurprisingly, remortgagors are taking advantage.

Does your mortgage lender owe you money?

Earlier this week, the financial watchdog revealed that hundreds of thousands of mortgage holders could have been overcharged by their lender. Are you one of the many who could be in line for a windfall?