moneysupermarket.com has argued that borrowers who save for a deposit are being unfairly stung by HLCs. The organisation also suggested that borrowers are more likely to encounter HLCs with a 95 per cent mortgage, as opposed to a 100 per cent product.
Research by moneysupermarket.com revealed that of the 100 per cent mortgage market, 12 per cent included a HLC, while for the 95 per cent product market, over 40 per cent of the 1,010 products on offer included a HLC.
Louise Cuming, head of mortgages at moneysupermarket.com, said: “Our research clearly shows the real reason behind HLC is purely another income ploy be lenders, which is infuriating. Fortunately there are enough products in the market for people to choose one where they can avoid paying the HLC.”
She added: “If a borrower does opt for a product with the HLC, they would be much better off paying it at the beginning of the term, rather than incorporating it into their home loan where they will be paying interest on it for years.”
However, Paul Hunt, head of marketing at Platform, said: “Above 90 per cent, I think there is still justification to charge. There is extra risk involved for the lender, especially in the specialist market. While it is there to protect the lender and not the borrower, it makes us more comfortable to lend, so making that product available.”
He added: “Below 90 per cent, HLCs should definitely be dropped. Any lender charging under 90 per cent is out of kilter with the market.”
