Mortgages Higher Lending Charges Are Outrageous

Mortgages .​
Higher Lending Charges Are Outrageous.
After you​ scraped together a​ modest deposit for your new home you​ may think you're home and dry .​
Think again .​
On top of​ there's the​ surveyors and solicitors to​ pay .​
Then the​ government want a​ slice .​
You've got to​ pay stamp duty at​ 1% of​ the​ property's price (if the​ house costs more than £250,​000 the​ rate of​ stamp duty increases – see the​ information at​ the​ foot of​ this article) .​
Phew! You're lucky you'll just make it​ – you'll be a​ homeowner at​ last!
Then out of​ the​ blue the​ mortgage lender sends you​ a​ new bill – another £1,​500 please Sir .​
They've called it​ a​ Higher lending Charge (HLC) and it's charged if​ you​ borrow more than 90% of​ the​ value of​ the​ house .​
About 75% of​ all mortgage lenders charge it​ and £1,​500 is​ about the​ average they ask for .​
And guess what – they money you​ pay won't benefit you​ in​ any way whatsoever! Not one jot .​
You're being charged for a​ form of​ protection insurance that protects the​ mortgage lender,​ not you​ .​
The HLC pays the​ lender if​ you​ default on​ your mortgage,​ your property has to​ be repossessed and the​ sale proceeds are less than the​ outstanding balance on​ your mortgage .​
In theory the​ HLC then pays out the​ shortfall to​ the​ lender but in​ practice many lenders carry the​ risk themselves so the​ HLC is​ just an​ extra fee to​ offset a​ higher lending risk .​
But an​ HLC doesn't let you​ off the​ hook! If your home is​ repossessed and there's a​ shortfall,​ you​ still have to​ pay the​ shortfall back to​ your lender - they're sure to​ chase you​ for the​ money .​
Whilst most of​ the​ lenders who charge HLC's will readily agree to​ add the​ charge to​ your mortgage,​ that's little consolation .​
In any case this means that you'll end up paying interest on​ top of​ the​ charge .​
Then,​ over a​ 25-year term,​ your HLC will have cost you​ closer to​ £2,​700!
In our opinion HLC's should have died out with the​ dinosaurs .​
If a​ lender is​ worried you'll default,​ they shouldn't have lent the​ money in​ the​ first place .​
And with all today's hi-tec credit checks and the​ risk based assessments used to​ process your application,​ you'd think the​ lenders were doing enough to​ protect themselves .​
In any case you​ may also end up paying a​ small interest premium for a​ 90% plus mortgage – so in​ practice you're being charged twice for the​ same risk!
The Nationwide Building Society,​ who incidentally do not charge HLC's,​ recently reported that during the​ last five years £1 billion has been charged in​ HLC's by some 800,​000 borrowers .​
It also found that just over 500,​000 were first time buyers – largely youngsters struggling to​ buy a​ home .​
We believe that HLC's are just another money making ploy for the​ mortgage lenders .​
By the​ way,​ the​ Higher Lending Charge used to​ be called a​ Mortgage Indemnity Guarantee,​ but they are all the​ same - only the​ name is​ different!
We think it's time for the​ Office of​ Fair Trading to​ open up the​ box and take a​ look inside in​ the​ same way as​ they did with credit cards .​
The OFT recently ordered many credit cards to​ reduce their charges by up to​ 40% .​
a​ bit of​ that magic would do wonders for Higher Lending Charges!
Current Stamp Duty rates on​ house purchases in​ the​ UK
Houses under £125,​000 No Stamp Duty
Houses £125,​000 to​ £249,​995* 1%
Houses £250,​000 to​ £499,​995* 3%
Houses over £500,​000 4%
*HM Inland Revenue rounds up house prices to​ the​ nearest £5 .​
Therefore,​ a​ house sold for between £249,​996 and £249,​999 will be rounded up to​ £250,​000 and they'll charge you​ 3% Stamp Duty on​ the​ lot!
Information correct as​ from the​ April Budget 2018.

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