Interest charges may cost your clients dear

6 February 2012 | By Alan Cleary, Managing Director, Precise Mortgages

You could be forgiven for thinking they were all the same and that they were transparent in how they present information, but sadly that is not always true.

In one case we dealt with recently the difference in the total amount repayable was £28,400 less with us compared to a well-known lender, despite both of us quoting the same rate.

The market norm on bridging loans where interest is retained is to charge it on the whole retained portion from day one.

We believe that is unfair so we only charge interest on the retained portion each month, as it is released.

I had another deal recently where we were quoting 1% per month to match another bridging lender and our gross loan was £8,000 less.

While I cannot confirm that every lender adopts this questionable practice what you get with us is fair and transparent as well as the best value.

Therefore, in the interests of customers, brokers should always check whether interest on the retained portion is charged as it is released, otherwise the customer is paying for something they have not had.

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