MORTGAGES

The Financial Services Authority do not regulate some forms of Mortgage.

Whether you are either buying your first home, moving house, re-mortgaging for home improvements or for capital raising purposes it is important that the mortgage, which you choose, is the best for your personal circumstances. To help with this decision we have gathered together some important facts, which explain what type of mortgages, are available and how the process works.

Level of Service
We will advise and make a recommendation after we have assessed your needs.

Disclosure of Fees
You will receive a keyfacts illustration when considering a particular mortgage, which will tell you about any fees relating to it.

Types of Repayment Methods
Repayment/Capital and Interest
Mortgages set up on this basis have interest and capital incorporated in every monthly payment. The mortgage amount reduces over the years so at the end of the specified term the mortgage has been repaid.

During the early years of a repayment mortgage the majority of each monthly payment is allocated to payment of interest, therefore at this time a small amount of the capital is repaid. This is important to remember if you intend to move early in the mortgage term.

Interest Only
Interest only is as it suggests only interest is paid during the mortgage term. Therefore the mortgage balance does not reduce, but remains outstanding to be repaid at the end of the mortgage term. Your monthly payments to the lender for this type of loan are less than with a repayment mortgage, but you must ensure that you are able to repay the full amount at the end of the term.

To provide for repaying the capital at the end of the term most people take out an investment plan, such as an ISA.
If Interest Only is the method of repayment taken it is essential you ensure a suitable Investment product is in place to repay the mortgage loan at the end of the mortgage period, otherwise YOUR HOME WILL BE AT RISK.

Mortgages Available
There are many different mortgages available, but they are generally split into the following categories:

Variable/Tracker Rate
The interest rate charged varies according to the economy, so your monthly repayments can go up and down during the term of the mortgage. There are normally no penalties for repaying the mortgage early.

Fixed Rate
The interest rate charged is determined at outset for a set period of time. Your monthly repayment will not be affected by any changes in the interest rate during this time. This type of mortgage generally carries redemption penalties should you wish to repay your mortgage during and in some cases after the term of the fixed rate. After the fixed rate period, the interest rate reverts to the variable rate.

Discounted Rate
A discount is agreed at the outset for a set period of time. This discount is applied to the interest rate charged during the term specified, therefore your monthly repayments will vary accordingly. This type of mortgage generally carries redemption penalties should you wish to repay your mortgage during and in some cases after the term of the discount.

Capped Rate
A maximum interest rate (the Cap) to be charged in a specified period is set. The monthly payment will be adjusted only if the mortgage rate falls below this cap, at this stage the rate will reflect the normal mortgage rate charged. Should the rate go up again during the term of the Capped Rate the maximum you will pay is the capped rate set at outset. This type of mortgage generally carries redemption penalties should you wish to repay your mortgage during and in some cases after the Capped Rate term.

Insurance Associated with Mortgages
Life Cover
The lender may insist that all individuals involved in the loan take sufficient life cover to repay the whole mortgage, and it is vital that this cover is taken and kept in force throughout the mortgage term.

Critical Illness Cover
This is designed to pay out a lump sum to pay off your mortgage on diagnosis of a specified disease, for example Cancer, Stroke, Heart Attack etc…
We offer products from a range of Insurers for Term Assurance and Critical Insurance.

Accident, Sickness & Unemployment
To protect your mortgage payments in the event of long term illness or redundancy.
Any income received from these arrangements may be taken into account by the DWP when they calculate your entitlement to income support benefits for mortgage payments.
For Accident, Sickness & Unemployment we usually arrange products from a single provider.

Property Insurance
You are responsible for ensuring that an acceptable Property Insurance policy is effected and maintained to protect the lender and yourself in the event of a fire or other event. Some lenders may insist on their own block policy being used.
For Property Insurance we usually arrange products from a single provider.

Future Considerations
Interest Rates
Interest Rates fluctuate according to market conditions. Any increase in interest rates may affect your monthly mortgage payment.

Unemployment
Periods of unemployment may affect your ability to meet your mortgage repayments, which will put your home at risk. These possibilities should therefore be considered when taking on mortgage commitments.

Change in Personal Circumstances
In the event that your personal circumstances change, you are still responsible for maintaining your mortgage commitments. Changes can come about through relationship breakdown, redundancy, retirement, and loss of job or reduction in salary.

Any reduction in your monthly income, even if you are in receipt of your employer’s or Statutory, maternity pay, may affect your ability to meet your monthly mortgage payment.

Property Values
Property prices fluctuate according to market conditions, and the value of your property may go down as well as up. In the future, this could mean that your mortgage loan exceeds its market value (known as negative equity).

Loan Repayment
You are expected to meet the monthly mortgage payments and to ensure that, where necessary, you have and keep a satisfactory Investment vehicle in place to repay the loan.

Additional Information
Mortgage Offer
Your lender will send you an offer letter setting out certain charges, calculations etc which you should read carefully and understand. If you have any questions, please contact us immediately.

Early Repayment Charges
These vary from product to product. This is when a lender will penalise you if you repay your mortgage in part or in full within a specified term, unless you are moving home and the rate is "portable"

Higher Lending Charge
Where your loan is for a higher percentage (for instance borrowing of 70% or more) of the property value, most lenders charge a one-off fee, which allows them to buy insurance to protect themselves against potential future losses, called mortgage default. This charge can normally be added to the loan or may be deducted from the amount advanced.

Fees
The lender in most cases will require a Valuation and a Fixed Rate Booking Fee with your mortgage application.

Credit Enquiries
Your lender will undertake credit enquiries upon receipt of your mortgage application. They may also supply information regarding the way your account is managed, to a Credit Reference Agency

Interest Rate Calculations
You can find out how your interest rates are calculated by referring to your offer letter from the lender

Broker Fee
As we work on your behalf researching all of the mortgages available to see which one is best for you, we do charge an administration cost of £250 to assist in covering our costs, this fee will not be refunded if the mortgage does not go ahead.

Your home may be repossessed if you do not keep up repayments on your mortgage.