Borrowers will spend more than £200m on higher lending charges in 2006, with some first-time buyers spending nearly £4,000 on this and stamp duty alone.

Research from Nationwide has shown nearly 100,000 borrowers will have to pay a higher lending charge on top of their mortgage this year. The fee is levied by mortgage lenders to provide cover in case a borrower defaults on their loan. Many lenders still make this charge for customers looking to borrow more than 90%, or even 75% in some cases.

Nationwide, which abolished this fee more than five years ago, claims it is especially unfair for first-time buyers. It is a significant additional cost for those attempting to get on to the property ladder that already have to deal with finding a deposit and paying stamp duty. The higher lending charge can be added to the loan but in this situation, a £2,000 fee could end up costing borrowers around £3,800.

Stuart Bernau, executive director of Nationwide, said: “Not only are higher lending charges unwelcome for homebuyers, they are also unavoidable. Consumers need to be aware that the headline interest rate is not all they pay – they must also take into account the fees and charges that form part of their mortgage deal.”