Mortgages. Be aware of the higher lending charge sting.

Summary

If you have a mortgage, and that is more than 90% of your property value, you may well have to pay a ( cheap loans ) higher lending charge. This article gives you the lowdown.

 

Author - Anna Richardson

You've worked hard to get the deposit together for a new property,

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and you could be forgiven for thinking that the worst is over. But don't forget, there are more charges to pay for. There's the stamp duty to pay for, which is 1% of the property price, and you've also got to pay the solicitors and the surveyors. If your house is worth more than £250,000, you'll have to pay out even more on stamp duty, which we will talk more about at the end of this article.

You thought it was all over, but then are another bill arrives in the post. It's for £1500, and it's to cover ( car insurance policy ) the higher lending charge. What is this charge? It's the price you pay for borrowing more than 90% on a mortgage, three quarters of mortgage lenders charge it and they usually ask for around £1500. Unbelievably, you won't see any benefit from that money. The higher lending charge is a form of protection to the mortgage lender, insurance against your house being repossessed and the subsequent sale falling short of the original sale price. The higher lending charge, in practice, hardly ever gets used, because the lenders usually end up carrying the risk themselves. And if your home is repossessed at a price less than what you paid for it, you will still have to cover the ( term assurance ) shortfall. The lender won't let you get away with that!

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Statutory Wealth Warning:
Your home may be repossessed if you do not keep up your repayments on a mortgage or any debt secured on it. Security by way of a charge on your home may be required.

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