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Mortgage Information



The Mortgage Code

This is a voluntary code followed by lenders and mortgage intermediaries in their relations with personal customers in the United Kingdom. It sets standards of good mortgage lending practice which are followed as a minimum by those subscribing to it.

As a voluntary code, it allows competition and market forces to operate to encourage higher standards for the benefit of customers. Your adviser is a Mortgage Intermediary and will act on your behalf.

Level of Service

Choosing a mortgage may be your most important financial commitment. We will offer advice and a recommendation as to which mortgage is suitable for you. When giving advice, we will take care to help you select a mortgage to fit your needs by asking for relevant information about your circumstances and objectives.

Our advice will also depend on your particular requirements and on the market conditions at the time. We will normally base our research on the market as a whole, but where it is limited to a selection of lenders, we will give you details.

The reasons for the recommendation will be given to you in writing before you complete your mortgage.

Fees and Charges

We sometimes receive a fee for arranging your mortgage. Before you take out a mortgage, we will tell you the amount of any fee in writing. If the fee is less than £250, we will confirm that we will receive up to this amount. If the fee is £250 or more, we will tell you the exact amount. Occasionally, we will receive a fee in some form other than cash – e.g., computer software, Air Miles – if this occurs, we will tell you about these ancillary benefits.

We will tell you the charges for any other service or product before or when it is provided or at any time you ask.

There are a number of alternative types of mortgage that can be available at any given time. The most common are:

  • A variable rate mortgage, where the amount of your monthly repayment is linked to the mortgage interest rate charged by your lender. If the mortgage rate is increased, the amount of your monthly repayment increases. Conversely, when the mortgage rate decreases, so does the amount of your monthly repayment. The change in your monthly payment is calculated to ensure that the mortgage loan is on course to be repaid within the agreed term.
  • A fixed rate mortgage, where the interest rate charged is fixed at a certain level for a set period of time. Whilst during this period you would be protected from any increase in monthly payments, caused by an increase in variable mortgage rates, you would not benefit from any decrease in monthly payments, caused by a reduction in those rates.
    However, during the fixed rate period, you would know exactly how much your gross mortgage payments would be.
  • A capped rate mortgage is a variable rate mortgage, with a specific maximum interest rate that can be charged, for a set period. In other words, whilst your mortgage payments will be affected by movements in the Mortgage rates, you will know the maximum rate that could be charged during the set period and hence be protected from rates higher than the maximum limit. (A collared rate is a specified minimum rate, hence a capped and collared Mortgage will be a variable rate mortgage, where the rate will be limited between a known minimum and maximum).
  • A discounted rate mortgage is a variable rate mortgage, which allows a known reduction in the mortgage rate charged for a set term. This differs from a deferred rate mortgage, where instead of allowing a discount in the rate charged, a reduced monthly payment is allowed, with the shortfall being added to the mortgage debt.

At the end of any fixed, capped or discounted rate period, your mortgage will revert to a variable rate. This may be higher than the rate you have been paying. In some cases, the lender may offer you an alternative rate.

Please refer to your mortgage offer letter for details. Some fixed, capped and discounted rate mortgages can be continued if you move house during the term of the offer rate. Please refer to your mortgage offer letter to see if this applies.

There are two ways in which you can repay your mortgage. These are capital and interest repayment (where the mortgage is often referred to as a repayment Mortgage) and interest payment (where the mortgage is often referred to as an interest only mortgage).

With a repayment mortgage, your monthly payments cover the interest charged and also include an element of capital repayment. You will therefore see your mortgage debt decreasing over a period of time. It should be noted that in the early years, most of each payment is used to cover the interest charged. As the mortgage debt decreases, a higher proportion of each monthly payment is used towards capital reduction.

The lender may insist that life cover be in place to cover the mortgage debt.

With an interest only mortgage, your monthly payments only cover the interest charged and therefore the Mortgage debt will remain at a constant level. In most cases, the lender will insist that you have an investment plan that will pay out a lump sum at the end of the Mortgage term to repay the mortgage debt. In addition, it is usual for the lender to insist that life cover be in place to cover the mortgage amount. The plans most commonly used for this purpose are a low cost endowment plan, a personal pension plan or a unit trust type plan.

Endowment plans have life cover built into them, whereas pension plans and unit trust type plans do not. In these cases, separate life cover would be necessary.

Mortgage Payments

YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOAN SECURED ON IT.

Repayment of Your Mortgage

Your home is at risk if you fail to ensure that your Mortgage loan is repaid by the end of its term. It is your responsibility to ensure that your mortgage is repaid on time.

If you have an interest only mortgage, it is also your responsibility to ensure that you have an investment plan in place to repay the mortgage debt.

Early Repayment of Your Mortgage

If you wish to repay your mortgage early, perhaps to move again or remortgage, you may have to pay an early redemption penalty. Please check the details of any Mortgage offer you receive so that you are aware of the conditions and that they suit your requirements, before accepting it.

Changes in Personal Circumstances

If you are taking out a mortgage with a partner, or with others, each person is responsible jointly and individually for the repayments.

Therefore, if there is a breakdown of the relationship, the lender can seek repayment of the full amount of the loan from each of the parties to the mortgage.

Should you be unable to work due to perhaps accident, sickness or unemployment, you will still have to meet your repayments. Insurances are available to cover you against these possibilities. You should also ensure that you have adequate life assurance cover for your mortgage.

Other Mortgage Related Services

We can also arrange Buildings and Contents Insurance, as well as Accident, Sickness and Unemployment Insurance.

You will be required to arrange Buildings Insurance, by the lender, to cover the rebuilding of your property should it be damaged.

Some lenders also insist that you take out Contents Insurance and /or Accident, Sickness and Unemployment Insurance. Please refer to your mortgage offer letter to check whether any such condition applies and if so, that it is acceptable to you.

Some lenders may insist that any insurance cover is arranged through them. Again, you should refer to your Mortgage offer letter to check this and if so, that it is acceptable to you.

Mortgage Indemnity Guarantee (MIG)

If your mortgage represents a high percentage of the price or valuation of your property (usually 75% or more) you may have to pay a high percentage lending fee. Some or all of this fee may be used by the lender, at its discretion, to obtain mortgage indemnity insurance to act as extra security for its sole benefit. If this is the case, the lender will give you a written explanation, stating that:

  • Such insurance will not protect you if your property is subsequently taken into possession and sold for less than the amount you owe;
  • You will remain liable to pay all sums owing, including arrears, interest and your lender’s legal fees;

If a claim is paid to your lender under such insurance, the insurers generally have a right to recover this amount from you.

Credit Reference Agencies

These are organisations, licensed under the Consumer Credit Act 1974, which hold information about individuals which is of relevance to lenders. Lenders may refer to these agencies for information that may assist them making various decisions, for example whether or not to provide a mortgage loan. The enquiry they make may also be recorded on your file at a Credit Reference Agency.

Details of the conduct of your account may be passed to a Credit Reference Agency by the lender if your payments fall into arrears. They have a duty to advise you should this occur.

Confidentiality

We will treat all of your personal information as private and confidential, even when you are no longer a customer, except where disclosure is made at your request or with your written consent in relation to arranging your Mortgage. However, we may disclose details to the Financial Options Group Limited and/or their regulatory authorities and auditors for the purpose of compliance.

Monitoring and Compliance

We have a Mortgage Code compliance officer and our internal auditing procedures will include monitoring compliance with the Code.

The Mortgage Code is monitored by the Mortgage Code Compliance Board who also keep a list of mortgage intermediaries that have undertaken to comply with the Code. Their address is The Mortgage Code Compliance Board, Festival Way, Festival Park, Stoke on Trent, Staffordshire ST1 5TA. Tel: 01782 216300

Complaints concerning the general operation of the Code by mortgage intermediaries can be made to them.

Complaints

We have internal procedures for handling complaints fairly and speedily and we will tell you what these are. These will include establishing a set time for an initial acknowledgement to your complaint. We will tell you how long it might take us to respond more fully.

If you wish to make a complaint, please write to the Mortgage Code Complaints Officer, Simply Independent Limited, 117 London Road, East Grinstead, West Sussex RH19 1EQ.

The arbitrators of the Mortgage Code are available to resolve certain complaints made by you if the matter remains unresolved through our internal complaints procedure. Please write to the Mortgage Code Arbitration Scheme, The Chartered Institute of Arbitrators, 24 Angel Gate, City Road, London EClV 2RS. Tel: 0171 837 4483 Where applicable, we will display a notice stating that we belong to the Mortgage Code Arbitration Scheme and that copies of the Code are available upon request.

The Mortgage Code

This Code applies to all loans (not overdrafts) secured on the home, which you, as a personal customer, own and occupy, unless the loan is governed by the Consumer Credit Act 1974 (when the provision and protection of that Act apply to your loan). The Code does not apply to the selling of investments that are covered by the Financial Services Act 1986. The Personal Investment Authority, who regulate the selling of such investments do not regulate mortgages, loans, building and contents insurance, or accident, sickness and unemployment insurance.

Enquiries about the Code and requests for copies of it can be addressed to either: The Council of Mortgage Lenders, 3 Saville Row, London. W1X 1AF. Tel: 0171 440 2255 or The Mortgage Code Compliance Board, Festival Way, Festival Park, Stoke on Trent, Staffordshire ST1 5TA. Tel: 01782 216300.

All subscribers to the Code will make copies available to customers.

Copies of the Banking Code are available from British Bankers’ Association, Pinners Hall, 105 – 108 Old Broad Street, London EC2N 1EX. Tel: 020 7216 8800

Additional information on a variety of mortgage matters is available in the form of “Fact Sheets” available from The Council of Mortgage Lenders.