Thursday 30th March 2006
Potential homeowners have been advised to take higher lending charges (HLC) into account when choosing their mortgage.
Most companies which offer mortgages for 90 to 95 per cent of the property will issue HLC, but Nationwide has questioned the reasoning behind these charges.
As a mortgage provider which does not have HLC, Nationwide has argued that there is no need for other banks to do so and that HLC are just a form of insurance for the bank which transfers the risk to the customer.
Charlotte Sjoberg, press officer for Nationwide, advised that if a lenders deal includes HLC, then homeowners should look elsewhere.
"Its money in the bank, for the bank," said Ms Sjoberg.
"We can manage without it [HLC], why cant others?"
Homeowners are advised to shop around for their mortgage and re-mortgaging using comparison sites on the internet as well as through face-to-face meetings with advisors.
Emmy-Lou Montgomery, editor of Moneywise magazine, said earlier this year that: "Mortgage lenders rely on our inertia to make their profits.
"Most people think switching their mortgage is too much hassle, so dont bother."
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