In mortgage practice, which statement best describes a Higher Lending Charge (HLC)?

In mortgage practice, which statement best describes a Higher Lending Charge (HLC)?

• A. A fee charged when LTV exceeds a threshold on remortgage
• B. A fee for extending the loan term
• C. A fee for property valuation
• D. A fee for securing mortgage insurance

Answer: (A)

Higher Lending Charge is a fee a lender may impose when, on remortgage, the loan-to-value is pushed above the lender’s chosen threshold. The idea is tied to risk: borrowing a larger portion of the property's value in a remortgage increases the lender’s risk, so the HLC compensates for that added risk. LTV is simply the loan amount divided by the property's current value, and when this ratio exceeds the lender’s limit, the HLC may be charged as either a fixed amount or a percentage of the loan. This fee is distinct from other charges like a valuation fee, a term-extension fee, or mortgage insurance, which relate to different aspects of the mortgage.

Higher Lending Charge is a fee a lender may impose when, on remortgage, the loan-to-value is pushed above the lender’s chosen threshold. The idea is tied to risk: borrowing a larger portion of the property's value in a remortgage increases the lender’s risk, so the HLC compensates for that added risk. LTV is simply the loan amount divided by the property's current value, and when this ratio exceeds the lender’s limit, the HLC may be charged as either a fixed amount or a percentage of the loan. This fee is distinct from other charges like a valuation fee, a term-extension fee, or mortgage insurance, which relate to different aspects of the mortgage.