The calculator, which according to Kensington is the first of its kind available to intermediaries, helps brokers pick out the best deal for their client by allowing comparison between mortgages with and without a HLC, including interest on the amount added by the HLC.
Ian Giles, marketing director at Kensington Mortgages, believed the calculator will make brokers’ lives much simpler. “Intermediaries have told us that they want transparency to assist them in giving the best advice and that headline rates with HLCs can be misleading. HLCs should not be used as a hidden income stream and lenders who charge them but fail to provide good products will find their practices hard to justify to the FSA,” he said.
He added: “We’ve developed our ‘True Cost Calculator’ for intermediaries to use if they want to work out just whose product is the most competitively priced, taking HLCs into account. We fully support industry sourcing engines who have been offering intermediaries comparison tools in this area and hope that our calculator further highlights to intermediaries the true effect of HLCs on headline interest rates.”
Paul Fincham, spokesperson for HBOS, said HLCs have become much clearer since regulation: “We only have HLCs for high-value LTVs so very few people actually end up paying them as the average first-time buyer puts down a 20 per cent deposit. However, everything is displayed on the Key Facts Illustration (KFI) so it’s easy to compare and it’s more transparent now than it has ever been.”
By entering the loan amount, property value, initial rate and details of the HLC into Kensington’s calculator, the broker will be told how much the mortgage will cost and the difference the HLC will make.
