Savills flags up dangers of MIG

Independent mortgage broker Savills Private Finance is warning would-be borrowers to be wary of lenders charging punitive Mortgage Indemnity Guarantee.

While most lenders only charge MIG on loans above 90% LTV if at all, some, including Capital Homes Loans, Amber Home Loans and Lambeth Building Society, charge MIG on LTVs of 75%.

Mark Harris, director of SPF, says: “MIG is an unnecessary evil in this day and age, where defaults on loans are significantly lower than they were when MIG was first introduced. It is usually first-time buyers who pay for MIG, as they often can only raise a small deposit. We would recommend would-be borrowers seek specialist advice to avoid paying MIG unnecessarily.

“What is sometimes ignored, or even not understood, is the fact that a market leading headline rate with a MIG may be less competitively priced than a product with a higher headline rate without a MIG.”