Halifax and Abbey have hit back at Nationwide after it accused them of levying unnecessary lending charges.Stuart Bernau, executive director at Nationwide, says both lenders run the risk of being accused of blatant profiteering by levying a higher lending charge and higher interest rates for those needing to borrow more than 90% of the property’s value. Nationwide says it believes that since it abolished its higher lending charge back in September 2000, borrowers have paid over 1bn in unnecessary higher lending charges. But both Halifax and Abbey defend their higher lending charges. Halifax says only a small proportion of borrowers who pay the charge at all and, like Abbey, adds that the charge is an acknowledgement of the greater risk involved. So, Mortgage Strategy asks: “Is there a need for lenders to levy a higher lending charge for those wanting to borrow more than 90% of the property’s value?” Bob Sturges, Money Partners – The problem with the HLC is its lack of transparency. Even financially sophisticated borrowers do not understand what it is and who stands to benefit in the event they default. Those unfortunate enough to do so are usually horrified to learn they receive little or no benefit themselves. HLCs also work against first-time buyers at a time when they are being left behind in the home ownership stakes. Melanie Bien, Savills Private Finance – Higher lending charges are outdated and unnecessary, even if a borrower is after more than 90% LTV. Though some lenders insist on HLCs to protect themselves, as long as the valuation is accurate and the lender has taken the client’s affordability into account when deciding how big a loan to give them, the likelihood of the borrower defaulting and the lender having to sell the property for less than the outstanding mortgage amount is much reduced. Mike Sims, Britannia – If a customer borrows over 75%, an HLC has to be paid. Britannia will pay this charge for the customer if the mortgage is no more than 90%. But if a customer borrows over 90%, the customer will pay the charge. The HLC is an insurance and therefore it protects the membership as a whole. James Cotton, London & Country – There’s no denying that lenders take on more risk with high LTV loans and should therefore structure their products accordingly. But I think using tiered interest rates is a fairer, more transparent way of passing on that risk to borrowers, rather than imposing a higher lending charge. Ray Boulger, John Charcol – Abbey and Halifax both say they need to charge higher lending fees but the fact that three of the five top lenders don’t shows that’s rubbish. The bottom line is that it’s the lender’s prerogative to impose different lending and interest rates for different clients but equally it’s the broker’s prerogative to choose the most competitive deal by looking at the whole deal and the long-term costs. Sally Lauder, Alliance & Leicester – Most lenders implement some sort ofhigh risk lending protection, either by a higher lending charge or by charging a higher interest rate where the LTV is greater than 90%. Some lenders do both, which could be seen as excessive. HLCs are charged to protect the lender but in most cases they only apply to a small percentage of borrowers and can be added to the loan.
From Dave Crump I’d like to congratulate Priya Shome of Purely Mortgages for the PR job she did in her Star Letter in Mortgage Strategy (September 26). BM Solutions must be proud. I and thousands of experienced candy-eyed mortgage advisers are normally too busy to download icons from lenders’ websites but on reading the Star […]
Nationwide is to slash the reservation fee on its five and 10-year fixed rate mortgages later this week.The fees are dropping from 389 to 199 to encourage homeowners to fix heir monthly mortgage payments for longer.Mortgage holders can benefit from taking a fixed rate mortgage over a longer term. They can plan financially for a […]
Over 100 full mortgage and AIP application forms on Trigold have been upgraded to next generation forms using Focus Business Solutions XML toolkit, goal:technology. All lenders and packagers can now have the benefit of increased customer usability, reduced administration costs and faster transactions, as all mandatory fields are captured prior to submission. In addition, the […]
A report from independent market analyst Datamonitor reveals that the UK high net worth population grew by 12% in 2004, taking the number of wealthy individuals with more than 200,000 in liquid assets to over 916,000 and this number will continue to rise over the next few years. Many private banking providers are reviewing their […]
As we approach the two-year milestone of auto-enrolment, employers have had the opportunity to truly assess the capabilities of their chosen support. They are also now realising that getting to the staging date was the easy part, and that support is required for almost every aspect of the day to day running of their scheme. With the three-year re-enrolment window coinciding for many with the total removal of commission and Active Member Discounts from pension-related products and services, as well as the introduction of the pension charge cap in April 2015, many employers will have no choice but to review their support options. But, what is involved in transitioning your auto-enrolment scheme away from your current support options? This guide from Johnson Fleming aims to outline some of these key areas and provide information and discussion points on what you need to consider.
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