UK Lenders that don’t apply a higher-lending charge

UK Lenders that don't apply a higher-lending charge

Around two-thirds of mortgage lenders apply a higher-lending charge (HLC) also known as mortgage indemnity insurance, a mortgage indemnity guarantee (MIG), additional security fee or mortgage advance premium if you want to borrow 90 per cent or more of your property's value.

For more about this, read What is mortgage indemnity insurance?

The amount will vary between lenders, but as a rule of thumb, you can expect to pay around £1,500 for every £100,000 you borrow.

So for a £150,000 mortgage, it could work out at £2,250.

For a full explanation of how these charges are calculated, go to How higher-lending fees are worked out.

Clearly, this is an additional cost you will want to avoid especially since only the lender benefits from it.

Ways to avoid an HLC

The easiest way to achieve this is to look at the deals on offer from lenders that don't apply HLCs.

An independent financial adviser or mortgage broker will be able to source these for you.

These lenders do tend to compensate for missing out on lucrative HLCs by charging slightly higher interest rates on mortgages above 90 per cent of property value.

Even so, their best deals should still work out substantially cheaper than comparable ones available from lenders that do apply HLCs.

But before committing yourself, always do your sums to check this is the case.

Alternatively, if you prefer what's on offer from an HLC lender, borrow a few pounds below its charging threshold and make up the shortfall from elsewhere.

For more on how to achieve this, visit How to avoid paying a higher-lending fee.

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

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