Higher lending charges cost UK £200m says Nationwide

Higher lending charges on mortgages will hit an estimated £200 million in the UK through 2006, Nationwide has predicted.

Higher lending charges are usually applied to mortgages when buyers need to borrow more than 90 per cent of a properties value and average £2,000.

The charges have become increasingly common as first-time buyers have struggled to bridge a yawning affordability gap.

Nationwide building society abandoned higher lending charges for first-time-buyers seeking the best mortgage rate more than five years ago, the company said.

Nationwide also warned that homeowners who may be tempted to add the charge to their overall sum of borrowing may find that it doubles over the span of their mortgage.

“Not only are higher lending charges unwelcome for homebuyers, they are also avoidable,” said Stuart Bernau, executive director of Nationwide.

“Consumers need to be aware that the headline interest rate is not all they pay – they must also take into account the fees and charges that form part of their mortgage deal.

“With first-time buyers paying an average of more than £128,000 on their property they could end up spending nearly £4,000 on higher lending charges and stamp duty alone,” he added.

© Adfero Ltd

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