UK mortgage holders have lost £1 billion in unnecessary higher lending charges (HLC), says a survey by Nationwide Building Society.
The survey estimates that mortgage holders have lost £1 billion since 2000, when Nationwide abolished its own HLC charge.
Nationwide executive director, Stuart Bernau, said: "Despite the negative publicity around higher lending fees, it is clear that many borrowers continue to find themselves faced with this charge at a time when their finances are already stretched and they are at their most vulnerable.
"Another cost of around £1,500 is the last thing they need."
The survey found that most people spend £128,918 on their first property, but only have £10,000 as a deposit. As a result, the majority of people find that they are borrowing 92 per cent of the value of their home, therefore incurring HLC fees.
The study shows that first time buyers could end up spending almost half of their salary after tax on their mortgage in the first two years to cover HLC costs.
Most mortgage lenders charge around £1,500 in HLC.
HLC, formerly known as mortgage indemnity guarantee (MIG), is the fee charged by the mortgage lender where the amount borrowed exceeds the given percentage of the value of the property.
For example, if borrower buys a property valued at £200,000, the lender will demand HLC fees if you are borrowing more than 75 per cent of its value.
HLC fees are normally charged at eight per cent of the value of the loan over the threshold percentage.
The charges can be paid in full or added to the mortgage advance.To read more about Mortgages, click here.
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