Borrowers wasting £1bn on high lender charges

UK borrowers are spending £1 billion too much on unnecessary lending charges, according to Nationwide Building Society.

High Street lenders still charge a higher lending fee for customers wishing to borrow more than 90 per cent of their property, and in some cases more than 75 per cent, Nationwide claims.

The fee is usually around £1,500 and covers the lender in case borrowers default on their loans.

The building society estimates that more than 800,000 homebuyers have paid this fee over the past five years, of which almost 500,000 are first time buyers.

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 figures are quite staggering, with around 800,000 borrowers paying one billion pounds over the last five years. Major lenders risk being accused of blatantly profiteering by charging both a higher lending charge and higher rates for those needing to borrow more than 90 per cent of the value of the property."

He advised prospective borrowers to shop around for their mortgage, and recommended they come to Nationwide as they do not enforce the higher lending charge.

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