Higher lending charge
Encyclopedia
A higher lending charge is a charge made by mortgage lenders in the UK when the loan-to-value ratio of a mortgage is higher than they are prepared to accept at standard rates.
Typically, HLCs are applied to loans in excess of 90% of the property value although, until the 1990s, the limit was usually 75%.
A number of mortgage lenders do not charge HLCs. They avoid this by either restricting the availability of their mortgages to lower loan-to-value ratios, or charging higher rates on loans with a higher loan-to-value. Differential pricing of this nature is also referred to as "pricing for risk".
Typically, HLCs are applied to loans in excess of 90% of the property value although, until the 1990s, the limit was usually 75%.
A number of mortgage lenders do not charge HLCs. They avoid this by either restricting the availability of their mortgages to lower loan-to-value ratios, or charging higher rates on loans with a higher loan-to-value. Differential pricing of this nature is also referred to as "pricing for risk".
See also
- UK mortgage terminologyUK mortgage terminology-Introduction:The UK mortgage market is one of the most innovative and competitive in the world. Most borrowing is funded by either mutual organisations or proprietary lenders...
- Mortgage loanMortgage loanA mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
- RemortgageRemortgageA remortgage is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security. The term is mainly used commercially in the angla saxon countries such as the United Kingdom and the United States , though what it describes is not unique to any one...
- Subprime mortgage lending