Could a lender add a higher lending charge to the advance?

Could a lender add a higher lending charge to the advance?

• A. Yes
• B. No
• C. Only with borrower consent
• D. Never

Answer: (A)

A higher lending charge is a one-off fee that lenders may apply to a mortgage to cover the extra risk of lending at a higher loan-to-value. One common way to recover that cost is to roll it into the loan amount so the borrower borrows more than the stated advance—the charge is added to the advance and repaid over the term with interest. Because the lender can include this cost in the loan, a higher lending charge can be added to the advance. In practice, the exact treatment depends on the product and lender, but the concept is that the charge doesn’t have to be paid upfront as a separate sum; it can be financed by increasing the loan. The other options are less fitting because the charge is not categorically unavailable, never, or restricted only to explicit separate consent beyond agreeing to the loan terms.

A higher lending charge is a one-off fee that lenders may apply to a mortgage to cover the extra risk of lending at a higher loan-to-value. One common way to recover that cost is to roll it into the loan amount so the borrower borrows more than the stated advance—the charge is added to the advance and repaid over the term with interest. Because the lender can include this cost in the loan, a higher lending charge can be added to the advance.

In practice, the exact treatment depends on the product and lender, but the concept is that the charge doesn’t have to be paid upfront as a separate sum; it can be financed by increasing the loan. The other options are less fitting because the charge is not categorically unavailable, never, or restricted only to explicit separate consent beyond agreeing to the loan terms.