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Many mortgage lender charge a higher-lending fee if you borrow a high proportion of your property's value typically 90 per cent or above.
This can also be called an indemnity guarantee, additional security fee or mortgage advance premium.
But you don't need to pay this.
One way to avoid paying a higher-lending charge is to buy a slightly cheaper property, allowing you to borrow a lower percentage of its value.
If this doesn't appeal, there are ways to get the property you want, without having to pay. You could
Choose a lender that doesn't charge
A minority of lenders don't apply higher-lending fees. An independent financial adviser will be able to tell you which ones might suit your borrowing needs. If none of them do
Borrow just below the threshold
There are several ways to achieve this
• Save a little longer. This will enable you to put down a bigger deposit.
• Pool your resources. If you're buying alone, join forces with a friend and buy together but get a lawyer to draw up an agreement about what you'll do in future if one wants to sell and the other doesn't.
• Borrow interest-free. Get a small interest-free loan from a friend or relative to boost your deposit.
• Get a loan. Use a low-cost personal loan to make up the difference. The interest rate will be higher than on your mortgage, but provided you borrow the smallest amount you can get away with, over the shortest term you can afford you'll pay it off much faster, so it will work out cheaper.
To find out more about early redemption penalties, read Early redemption penalties explained and How to avoid paying an early redemption penalty.
What
is a mortgage?
A basic summary of the
rules
The
choices you need to make
How much can
you borrow?
How do you prove
your income?
How long are mortgages
usually for?
What will happen to interest rates?
How
to Choose your Mortgage
Types of Mortgage
Remortgages
Where to Find your Mortgage
Getting
a Mortgage in Principle
Guide to Buying Home in the UK
Guide to UK Home and Mortgage Insurance
To read more on this subject please see the list below or your mortgage guide or your home buying guide
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Read more about Mortgage Basics
See contents of Full Mortgages Guide
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I've read enough for now and want to get a free Quick Mortgage Quote
Mortgage
Basics
What is a mortgage?
A basic summary
of the rules
How much
can you borrow?
How
do you prove your income?
How
long are mortgages usually for?
See contents of Full Mortgages Guide
See contents of Home Buyers Guide
I've read enough for now and want to get a free Quick Mortgage Quote
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Mortgage
Basics
How
to Choose your Mortgage
Types of Mortgage
Where to Find your Mortgage
Getting a Mortgage in Principle
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