Higher Lending Charge

• A charge that is sometimes payable by a borrower if the amount of the loan is high compared to the value of the property used as security (a high loan to value ratio).

The higher lending charge is used to protect the lender in the event that they have to repossess and sell the house following non-payment by the borrower, and the sale price is not enough to repay the whole loan. The lender sometimes uses the money to take out "Mortgage Indemnity Guarantee" (MIG) or "Mortgage Guarantee Insurance" (MGI) to help cover any shortfall.

It is important to understand that even though the borrower may have to pay the premium for such insurance, it is only for the benefit of the lender. It would not help a borrower if they sold their house for less than they had borrowed and even if a lender has been able to claim on such insurance, the borrower can still be required to make up the shortfall by the insurer.

The higher lending charge was sometimes referred to as MIG, MGI or high LTV premium in the past.