What does Additional Security Fee mean?

The Additional Security fee works as a sort of guarantee for the lender that the individual who borrows will not default on the loan. The fee is constituted by a one time lump sum paid to the lender, and the role of this amount is to safeguard the lender from any problem that might occur. Also, the borrower is generally required to pay the additional security fee when the borrowed amount exceeds 75% of the real market value of the respective property. The arrangement itself is also known as Mortgage Indemnity Guarantee Insurance (MIG), or Higher Lending Charge (HLC). Both MIG and HLC have the role of assuring coverage for the lender in case the property is subject to repossession.