TFC Homeloans, the branded lending division of mortgage distributor The Finance Centre, believes that borrowers should be offered the choice to pay higher lending charges or not when taking out a mortgage.
TFC has confirmed that these charges are definitely being shunned by some mortgage advisors, as they favour products which do not force borrowers to pay HLCs as an additional separate cost.
Simon Snape, head of products at TFC Homeloans, says: There is no doubt that some advisors are actively avoiding mortgage products which force borrowers to pay for HLCs as an additional cost. There is now a far wider choice of competitive HLC free products available and advisors are selecting products which dont require their clients to use cash which they would prefer to put
towards a deposit or moving costs. At the same time, many borrowers are happy to pay the one off charge in order that they can get the lowest interest rate possible.
Amongst those lenders which have recently launched HLC free products is Mortgages plc.
Peter Beaumont, sales & marketing director at Mortgages plc, says: At Mortgages plc our policy has always been to provide both brokers and borrowers with as much choice as possible. Few Borrowers understand higher lending charges. Selling products which do not carry this as a separate cost enables brokers to remove a sales barrier. Lenders have to charge more to cover
the additional risk of higher LTV loans, but this cost can be either passed on within the mortgage rate or as a separate charge. Were happy to let borrowers choose which option suits them best.