Many of the major mortgage lenders are penalising borrowers who do not have a large deposit to put down.
The fee is called a ‘higher lending charge’ and can cost the average borrower £2000 if they do not have a 10% deposit.
The lenders claim this charge is just a way of protecting themselves against the higher risks, but many critics have condemned them as just another way of making more money. It is estimated that lenders in the UK will make around 220 million pounds this year with these fees.
Not all lenders make these charges so it pays to shop around to find the best mortgages deal you can.
Mortgage fees in general have also come under fire as the average ‘arrangement fee’ for taking out a mortgage as nearly doubled in the last three years.
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