First time buyers should 'be wary' of HLC's

06-Dec-2006

First time buyers should be aware of the implications of higher lending charges (HLC), when arranging their mortgage.

According to research by Moneyfacts, although some mortgage lenders have now scrapped HLC's, first time buyers will find that around 75 per cent of lenders still impose a fee of between seven per cent and 12 per cent.

Furthermore, although a HLC traditionally only applied to mortgages with a loan-to-value (LTV) beyond 90 per cent, in many cases they can also apply with an LTV as low as 75 per cent for some mortgages.

"Being subjected to a HLC can be a very costly addition to the fees already associated with house buying and can make the initial savings on a competitive rate vanish almost immediately," said Julia Harris, an analyst at Moneyfacts.

"Make sure you check out the full terms of any new mortgage deal, as the fees are often hidden beneath a great headline rate," she added.

A number of mortgage lenders do not charge a HLC, including Bradford & Bingley, Chesham Building Society, First Direct and Egg.

Moneyfacts offers comparisons on a number of financial products, including mortgages, insurance and credit cards.

To find out more about all the different and creative and innovative mortgages designed specifically for first time buyers click here.

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