Deposits could catch buyers out

First-time buyers who believe they are saving themselves money in the long-run by saving for a larger deposit may find that this is not the case, it has been suggested.

In the current market, buyers who save for a five per cent deposit end up paying more than those who put down just a four per cent deposit because of Higher Lending Charge (HLC) discrepancies, Fool.co.uk has revealed.

The personal finance website has said that the loophole has come about because lenders are not charging HLCs for mortgages with a loan-to-value of 96 to 100 per cent.

"It seems that lenders have taken their eyes off the ball, and unwittingly created an opportunity for first-time buyers," noted Fool.co.uk head of personal finance David Kuo.

"But remember, it's essential to look at mortgage deals in their entirety taking into account all the costs that apply," added the site's mortgage expert Jane Baker.

New buyer enquiries fell for the 11th month in a row in October, the Royal Institution of Chartered Surveyors (Rics) reported last week.

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