Mike Fitzgerald, sales director at Brentchase Financial Services, said although most lenders have stopped charging this type of insurance, previously known as Mortgage Indemnity Guarantee (MIG), there are still cases where providers are adopting the policy of charging these ‘unfair’ fees.
He said: “I believe a body such as the Consumers’ Association will start to ask questions about why some companies have higher lending charges and others don’t.
“Why, for example, does The Mortgage Business (TMB) charge it while BM Solutions doesn’t? It seems strange that there is this discrepancy when they are part of the same group.”
He added: “On a little property priced at £180,000 at 85 per cent LTV, TMB would have a higher lending charge of around £1,130 while on a similar case BM has no higher lending premium. This is something that should be addressed.
“Higher lending charges are a hangover from the 80s which most lenders have abandoned, but some providers are still hanging on tight to it.”
Kevin Morgan, managing director of Consilium Financial Planning, commented: “I would welcome this policy to be reviewed. There are now very good products on the market that have no MIG.”
Matt Grayson, head of public relations at BM Solutions, said: “We’ve made a point of saying over the last couple of years that we don’t charge MIG as we have a competitive brand strategy. But MIG is an element of product pricing and all lenders have their own pricing structures.”
