This document serves as a guide to your personalised Mortgage Illustration. It helps to explain the main features of the mortgage and provides important information about your payments.
We are required by The Financial Conduct Authority (FCA) – the independent body that regulates financial services – to provide you with this information.
It’s important you understand the commitment you make when you take out a mortgage, which is a loan secured against your property, and the consequences if you fail to fulfil your obligations.
Failure to make your mortgage payment may result in additional charges. Records will also be passed to Credit Reference Agencies, which may impact on your ability to take out further credit facilities.
It is important that you contact your lender straight away if you are experiencing, or believe you may experience difficulties making your mortgage payment so they can understand your circumstances and discuss support which may be available.
In the event of severe breaches of your obligations, the ultimate consequence may be legal action by the lender.
Your home may be repossessed if you do not keep up repayments on your mortgage.
It’s important you understand the features of the mortgage so you can decide if this mortgage is right for you. You should read this document in full along with your illustration.
If you have any further queries you can call Homeline Mortgages on 01202 937444.
In addition, The Money Advice Service provides free and impartial advice and publishes useful guides which will help you consider if a mortgage is right for you. These are available on www.moneyadviceservice.org.uk or by calling 0300 500 5000.
Understanding your Mortgage Illustration
Your illustration assumes your mortgage account will open on the same day as it is produced. As such, the amount of your payment and the number of payments at the initial rate may differ once it opens. Your mortgage lender will confirm the exact details in your completion statement. In addition, your payments may vary from those shown in your illustration if interest rates change or if you do not keep this mortgage for the full term.
Your illustration contains 13 sections and and might also contain an appendix which will provide specific information about the mortgage you have requested. Further explanations of some of the sections are shown overleaf.
Section 3 – What you have told us
The amount, currency and term of the mortgage you have requested, along with the property price or valuation and type of mortgage are shown. Any fees you have chosen to add to the mortgage balance will be confirmed – interest will be payable on this amount over the term of the mortgage.
The calculations in the Illustration are based on the property price or valuation shown and could be affected by the outcome of a valuation of the property where necessary, or by changes to any of the information that you have given us.
The type of mortgage you have chosen will influence how you repay your mortgage:
- Interest only means your monthly payment will only cover the interest payable and the original mortgage balance will remain outstanding in full at the end of the mortgage term. It is your responsibility to repay this in full by the end of the mortgage term.
- Repayment means you will be gradually repaying the amount you have borrowed as well as the interest, over the term of the mortgage. This means if you maintain your monthly repayments, no balance will be remaining at the end of your term.
Section 4 – Description of this mortgage
Depending on the product illustrated, there may be an introductory period during which you will initially pay a different rate of interest than the remainder of the term. The rate, the date it is payable until and the current rate it will revert to (where applicable) will be shown here.
- Fixed Rate – your rate of interest is fixed for an initial agreed period, even if interest rates go up or down during this period, your monthly payments will stay the same.
- Tracker rate – your rate of interest tracks the Bank of England base rate and your monthly payments will vary depending on changes made to the Bank of England base rate.
- Standard Variable Rate (SVR) – we set this rate – your monthly payments will vary if we change this rate.
Section 5 – Overall cost of this mortgage
The total amount repayable, how much you will pay back for every £1 borrowed and the overall cost for comparison as an annual percentage rate of charge (APRC) are shown. The APRC represents the total cost of the mortgage shown as a percentage, helping you to compare this mortgage with any others of the same repayment type you may be considering. These figures will vary if interest rates change or if you do not keep this mortgage for the full term.
Section 6 – What you will need to pay each month
The frequency, number and amount of payments you will need to make are shown. All variable rates and the associated amounts payable are based on current interest rates and may change throughout the mortgage term in line with any changes made to the interest rates. If you have an interest only mortgage, your monthly payment will only cover the interest payable and the original mortgage balance will remain outstanding in full at the end of the term. It is your responsibility to repay this in full by the end of the mortgage term.
Section 7 – Are you comfortable with the risks?
Whilst on a Variable product (including once the initial rate period has ended for Fixed Rates), the rate payable may change in line with interest rate changes as is illustrated. An example, outlining the impact an increase of one percentage point is shown, but rates may increase by much more. This could significantly increase your payment amount and you must consider if the mortgage will remain affordable in the event of a change. Payments to your mortgage must be maintained for the full term – you must think about whether you could do this if your income was to decrease. This could be as a result of losing your job or being prevented from working through illness. Your home will be used as our security for the mortgage. This means your home may be repossessed if you do not keep up repayments on your mortgage.
Section 8 – What fees must you pay?
Fees payable for your mortgage will be displayed. It’s important to note there may be other fees, taxes or costs payable in addition to those illustrated. All fees are non-refundable once paid.
An Exit Fee is payable when you repay your mortgage in full. If your mortgage is made up of more than one part – referred to as ‘sub-accounts’, the fee is payable for each sub-account repaid in full unless they are repaid at the same time.
Depending on the product you have chosen a Booking fee may be payable – this ensures the mortgage product you are applying for is secured. An Arrangement Fee may also be payable and will be outlined here. If you are able to and choose to add your Arrangement Fee to your mortgage balance, you will pay interest on this amount for the remainder of the mortgage term.
Should the lender require a valuation to be carried out on the property, a valuation fee may be payable. An assumed cost based on the value of the property provided will be shown. Depending on your needs, you may wish to instruct a more detailed property inspection.
If Legal Fees are required for conveyancing work, these are usually payable at the time the mortgage starts and are payable directly to your solicitor. The figure quoted in the Illustration is an estimate and is only part of the cost of the legal work that you might need to pay. You should ask your solicitor for details.
Section 9 – Insurance
As a condition of the mortgage, the property must be adequately insured at all times under an acceptable buildings insurance policy – it does not however have to be insured through the lender.
Section 10 – What happens if you do not want this mortgage anymore?
Any Early Repayment Charges (ERCs) that would be payable are shown here along with the circumstances in which they would apply. An example demonstrates the maximum amount that you could be charged if you paid off your entire mortgage within the ERC period.
In addition, details are provided to outline your options should you wish to move house and keep your existing mortgage, known as Porting. The circumstances in which this is acceptable, as well as any associated fees are outlined.
Section 11 – What happens if you want to make overpayments?
This section confirms if the mortgage will allow you to repay any amount over and above your regular monthly repayment. Any Early Repayment Charges or restrictions which apply will be confirmed here.
Section 12 – Additional features
If the illustrated mortgage has any additional features, a summary including any conditions which may apply will be outlined here.
Appendix (where included)- Additional information to be read with your Illustration
This sheet included with your Illustration, shows a second interest rate which illustrates the impact of potential future interest rate changes. This is based on the highest borrowing rates over the last 20 years – it can’t be used to predict future interest rate changes.
If you have a mortgage that has a combination of fixed and variable interest rates, the calculation will be based on the highest borrowing rates over the last 20 years for the variable interest rate component only.
In addition, if you have told us you receive some or all of the income supporting your mortgage application in a foreign currency, this section will also contain information confirming the potential impact any changes in foreign exchange rates may have on your repayments.
Your rights as a borrower
You will be issued an offer document, you will have a reflection period to consider whether this mortgage is right for you. During this time, you can compare offers, assess the implications of taking out this mortgage and make an informed decision. You may accept the mortgage offer at any time during the reflection period by signing and returning the document to the lender.