MIG, High Lending Fees or Mortgage Indemnity Payments (MIP), provide lenders with an insurance if the customer defaults on the loan, but unlike other insurance policies the customer paying does not receive any additional benefit.
Brian Pitt, sales & marketing director at Future Mortgages, said:
“With house prices nearly 20% higher than this time last year, there is a serious affordability issue to be addressed. Customers attempting to enter the housing market may have quite a healthy deposit amount, but with spiralling house prices the relative value of their deposit is much lower. As a result more first time buyers are falling into higher LTV bands and as a result are facing additional MIG payments. It has long been argued that it is inappropriate for borrowers to pay for an insurance that does not offer them any protection and we would like to call upon the industry to review it’s use of MIG."
MIG can add thousands of pounds to the cost of a mortgage that can stretch the financial limits of borrowers with house prices at such a high level.
Future Mortgages removed MIG from all of its mortgage products 12 months ago.