Higher Lending Charge
A higher lending charge is levied by some mortgage lenders on people looking to take out a loan worth more than 90 per cent of the value of the property – although they can come into effect for loan to value (LTV) ratios as low as 75 per cent.
Higher lending charges are generally set at about £1,500 and are designed to protect the lender in case the person taking out the mortgage defaults on the loans.
The only benefit the borrower receives from a higher lending charge is that it can enable them to borrow more money from some lenders.
These can sometimes be added to the value of the mortgage but this simply results in the mortgage-holder paying both the charge and interest on it over the term of the mortgage.
Several lenders do not levy these charges and a canny borrower should be able to avoid them entirely.