Mortgages

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The Mortgage Code

The mortgae code sest out minimum standards which mortgage lenders and intermediaries have to meet.

A summary of the code is supplied below.
By presenting this information, Abacus Financial Planning Consultants Limited is confirming to you that these principles are the basis of our relationship with our clients. Broadly speaking the code sets out:

• how your mortgage should be arranged;
• what information you should receive before you commit yourself; and
• how your mortgage should be dealt with once it is in place

You can use this web page as a checklist to help you through the process of arranging a mortgage.

Choosing a mortgage
There are different levels of service which your lender or intermediary normally use to help you choose a suitable mortgage. The lender or intermediary will tell you, at the beginning, which of these levels of service they can provide. The levels are:

• advice and a recommendation on which of the mortgages they can provide is most suitable for you;
• information on the different types of mortgage product on offer so that you can make an informed choice of which to take; or
• information on a single mortgage product only, if only one mortgage is available or if you have already made up your mind.

Check that you understand which level of service you are being offered, and what this means to you.
Whichever level of service they provide, your lender or intermediary should give you information on all the following areas of the mortgage you are considering.

• The repayment method (for example, endowment, capital and interest) and the repayment period.
• The financial consequences of repaying the mortgage early.
• The type of interest rate - variable, fixed, discounted, capped and so on.
• What your future repayments might be after the fixed or discounted period.
• Whether you have to take any insurance services with the mortgage and, if so, whether the insurance must be arranged by the lender or by the intermediary.
• The costs and fees which might be involved with the mortgage - valuation fees, arrangement fees, legal fees, early redemption fees and so on.
• Whether you can continue with your selected mortgage terms if you move house.
• When your account details may be passed to credit reference agencies.
• Whether you need to pay a high percentage lending fee and, if so, what this means to you.

If you are using the services of a mortgage intermediary to arrange the loan, they must also tell you if they are receiving a fee from the lender for introducing the mortgage to the lender. They must also let you know whether they usually arrange mortgages from a number of selected lenders or from the market as a whole.
Your mortgage intermediary can only charge you a fee for arranging your loan if it is completed. If it is not, but you owe other costs (for example, a valuation fee), you may have to pay these.
If your lender or intermediary has provided advice and a recommendation, they should also confirm, in writing, the reasons for the recommendation. Check that you fully understand this written confirmation, and ask if there is anything that is still not clear to you at this stage.

The Code's main commitments
The code had 10 main commitments. Broadly speaking, these say that lenders and intermediaries will:

• act fairly and reasonably with you at all times;
• make sure that all services and products keep to the conditions of the code, even if they have their own terms and conditions;
• give you information on services and products in plain language, and offer help if there is any area which you do not understand;
• help you to choose a mortgage to fit your needs, unless you have already decided on your mortgage;
• help you to understand the financial effects of having a mortgage;
• help you to understand how your mortgage account works;
• make sure that the procedures their staff follow reflect the commitments set out in the code;
• correct errors and handle complaints speedily;
• consider cases of financial difficulty and mortgage arrears (missed payments) sympathetically and positively; and
• make sure that all services and products meet the relevant laws and regulations.

Lenders and intermediaries will make sure that their staff are appropriately trained, qualified, experienced and supervised.
Nowadays Mortgage advice is covered under the regulations of the Financial services authority and all the relevant information concerning a mortgage must be shown in what is known as the KEY FACTS DOCUMENT. This should be supplied to you by your advisor and it is a document providing information in plain english that shows the facts concerning your proposed mortgage including all the costs etc associated with the loan. All advisors must present the KEY FACTS in the same format to allow clients the freedom to make comparisons.

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