How to avoid paying a higher-lending fee

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How to avoid paying a higher-lending fee

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.

To read more on this subject please see the list below or your mortgage guide or your home buying guide

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Value of Property	£
		(eg 125000)

Borrow How Much?	£
		(eg 92500)

Your Mortgage Type

First time buyer?		Yes No
Have you found property?		Yes No
Country

Sorry ! The amount you want to borrow is less than £25,000. This is the minimum allowed for a mortgage. But don't worry! You could get the money via a personal loan. I want a free no obligation loan quote Click OK No thanks. I will change my borrow amount to more than £25,000 Click Cancel