First time buyers stung by fees

03 October 2005
First time buyers are being offered 100 per cent mortgages by well known banks like Barclays and Natwest, but are then being hit by steep lending fees and elevated interest rates.

Disparity in lending rates is also concern within the industry, with ordinary borrowers being offered competitive rates as low as 4.35 per cent, while those with small deposits are being offered rates as high as 5.39 per cent.

Nationwide spokesperson Stuart Bernau, said: "Major lenders risk being accused of blatant profiteering by charging a higher lending charge and higher rates for those needing to borrow more than 90% of the property value."

The small print in mortgage contracts also means that unsuspecting buyers must pay higher lending fees of up to £1,500.

Many mortgage providers like Nationwide have abolished higher lending charges, but Halifax, Abbey, NatWest and Royal Bank of Scotland still charge fees to mortgage buyers who need to borrow more than 90 per cent of the price of the property.

Northern Rock, Cheltenham & Gloucester and The Woolwich have all withdrawn their higher lending charges, some estimating that buyers could save up to £2,000 if they did not need to pay a higher lending charge.

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