The Higher Lending Charge (HLC), formerly known as a Mortgage Indemnity Guarantee (MIG), is a one off fee which is charged by some mortgage lenders when the amount being borrowed exceeds a given percentage of the value of the property. This fee may be used by the lender to purchase an insurance policy designed to protect them (thy lender) against loss in the event of you (the borrower) defaulting on the loan. The fee may be insisted upon by the lender at the start of the loan and whilst it is to protect them it is you who has to pay the fee.

If for example the property you are purchasing is valued at £200,000, the lender may apply a HLC if you’re borrowing more than 75% (£150,000) of the value. So with a loan of £180,000 representing 90% of the value you would be left with a HLC to pay. With a typical charge of 8% the fee would amount to £2,400 (8% of the difference between £180,000 and £150,000 being £30,000).

However, in an era of significant growth in property value and therefore reduced risk to the lender, there are many who will only apply the HLC at 90%, 95% or even not at all.