What is a...

Higher Lending Fee

A Higher Lending Fee is an extra charge made by lenders on some loans. In these circumstances, the lender will require additional security on the amount in excess of this threshold in the form of an insurance policy (a higher percentage lending fee) and often Mortgage Indemnity Insurance is required to be taken out as well. This can also be applied in cases where a borrower does not have the necessary deposit.

The lender will arrange the insurance and the premium will be paid by you; in some cases, it can be added to the loan.

The policy is used to protect the lender only and is used to cover the lender in the situation, where the property is repossessed and the loan plus any unpaid interest exceeds the sale value of the property. You will then owe the insurance company any payment claimed by the lender.

How is the cost of a higher lending charge calculated?

The charge is usually a percentage of your property value- as the fees are usually ‘triggered’ after a certain Loan To Value, the amount may vary depending on how much beyond that amount you want to borrow.

Will a Higher Lending Fee affect my Credit Rating?

A Higher Lending Fee itself won’t appear on your Credit Report, although the mortgage almost certainly will. You may find that the fee is included in the total outstanding balance.

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