Nationwide is highlighting the issue of higher lending charges for mortgages, which it says are unnecessary.
The building society claims that borrowers in the UK are spending £140 million on higher lending charges, previously known as MIG or Mortgage Indemnity Guarantee, which usually affect those who borrow more than 90 per cent of the value of their property.
This charge, often in the region of £1,500, is thus of particular concern to first-time buyers, 50,000 of whom were faced with this significant additional cost in 2004, Nationwide points out.
However, according to the building society the charge is entirely unnecessary, acting simply as a fee to cover the mortgage provider in case the borrower defaults on his or her loan.
"Borrowers need to beware of higher lending charges and should ask if such a charge would apply to them," Stuart Bernau, Nationwide executive director, states.
"Some lenders are penalising the very borrowers who can least afford it. More and more first time buyers are struggling to raise the deposit to buy their homes - another cost of around £1,500 is the last thing they need. Prospective borrowers should shop around for their mortgage."Shop around for your mortgage by clicking here.
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