Higher Lending Charges. Fair or Unfair??

oatesdaniel

Hi. In June 2008 I had to get a 95% mortgage. Because of this, RBS charged me £2.5k as a higher lending charge on top of all the other fees for setting up the mortgage and the valuation etc etc. Does anyone know if these charges are legal or not? I believe this could be nearly as big as the Bank Charges phenomenon thats been going on the last couple of years because there are thousands of people that are being charged this fee, plus the interest on top of it, which is a lot of money. Please help anyone!!

Wutang_2

Help what?

Help people use their brains or not? If you didnt like it, then why did you agree to it?

I think you are over emphasising the 'phenomenom' - I would put it on the scale of the infamous liver and onions phenomenom.

dwsjarcmcd

These fees are legal and have been questioned many times, so I'm afraid you are wrong about your assersion about this being news. It isn't.
As Wutang says, if you didn't like it why did you buy it? Oh it's because no lender would have given you a loan if you wern't prepared to pay the HLC

VIGILANT22

If you borrow a high proportion of your property's value typically 90 per cent/95 in your case above the lender may charge a higher-lending fee. They will use part of this to pay for an insurance policy to cover themselves if you can't keep up your repayments, as you are deemed as a higher risk.

It is sensible to consider all the costs, fees, interest rates, incentives and other features before deciding which product may be the best for you..... a "canny" borrower should be able to avoid HLC entirely.

Quote: I believe this could be nearly as big as the Bank Charges phenomenon
Couldn't have put it any better than the previous posters!!

Dan_1976

HLC is an insurance premium. You pay to protect the lender against any loss in the event of a repo. It costs a lot when you get up to high LTV's. It is normally applied after 75% LTV but its cheaper at that level and the lender pays it.

It came about after the last crash in the 80s-90s I believe. SOme lenders have there own policy putting the money in a big lump to cover them but most pay for an indemnity policy.

Did you know, that if they repo and claim, the insurance policy can come after you and will come after you for the loss?

I forget the name of it, but I am sure one the brokers will remember!

It is a fair fee as its upfront and should be explained clearly and you should be told of the above. You should also be told if the lender pays for it as you could still be liable for loss.

Senior_Paper_Monitor

Certainly totally legal - and probably fairly applied (which will be the actual test if taken to that level).

I sometimes feel that it is 'less than equitable' in that it is paid by the client and protects only the lender BUT if it were to protect the client (i.e paying the mortgage where the the client is unable to do so, and thereby possibly protecting credit rating etc - depending upon when a claim was serviced) it would be considerably more difficult to administer and certainly very much more expensive.

There are indeed additional insurance options which will protect the client (albeit within a somewhat more restricted definition) - and some of these these are not exempt from from well publicised 'issues' of their own.

The fact remains that the lenders, understandably for many reasons, consider high LTVs as higher risk lending and will reflect that in the overall package (either as higher interest rates, increased application fee) if they cannot utilise the 'higher lending charge' vehicle. OR will further reduce the availability of high LTV loans and a lot of prospective customers will not thank you for that!

.... and a personal opinion .... you did not 'have to get a 95% mortgage' you chose to get one! In doing so you were presumably aware of the costs, and their make up, involved and still took the decision to proceed!

VIGILANT22

Dan_1976 wrote: »

Used to be referred to as a MIG mortgage indemnity guarantee

dunstonh

plus the interest on top of it, which is a lot of money. Please help anyone!!

They do not charge interest on top of it.

What you mean is that you chose to buy a house with a mortgage without having sufficient savings to be able to put down a large enough deposit to avoid this fee. You also failed to have enough savings to cover the MIG and you chose to add it to the mortgage and therefore are paying interest because of that.

Dan_1976

VIGILANT22 wrote: »

Dan_1976 wrote: »

Used to be referred to as a MIG mortgage indemnity guarantee

No, i meant the right to claim the loss from the client by the insurance firm. It has a phrase of some type.

MIG, not heard that for a while!

VIGILANT22

Dan_1976 wrote: »

VIGILANT22 wrote: »

No, i meant the right to claim the loss from the client by the insurance firm. It has a phrase of some type.

MIG, not heard that for a while!

Subrogation?

Dan_1976

Subrogation, thats the one! lol you must be board! thanks