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First time buyers warned of mortgage pitfalls

Date: Tue, 26 Apr 2005

First time buyers are being urged to be aware of higher lending charges when applying for a mortgage.

Research by the Nationwide Building Society suggests that borrowers in the UK are paying around £140 million in unnecessary lending charges.

In particular, those customers who borrow more than 90 per cent of the value of the house may subject to a mortgage indemnity guarantee at a cost of an additional £1,500.

It is estimated that the additional charge was paid by nearly 50,000 first time buyers during 2004, and figures suggest that this amount is set to increase in line with rising house prices.

"Borrowers need to beware of higher lending charges and should ask if such a charge would apply to them," said Nationwide executive director, Stuart Bernau.

"More and more first time buyers are struggling to raise the deposit to buy their homes - another cost of around £1,500 is the last thing they need."

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