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The mortgage code provides protection for you as a mortgage borrower. It
sets out minimum standards, which mortgage lenders and intermediaries
have to meet. This web page is designed to introduce the mortgage code to
you.
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The
Mortgage Code
By giving
you this information, your lender or intermediary is confirming to you
that they keep to the principles of the mortgage code. This provides
important protection for you, as the code sets out:
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- 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.
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If
a lender or intermediary fails to meet the standards of the code, and
you suffer as a result, you have the right to compensation under a
compulsory independent complaints scheme.
The rest of this web page concentrates on the details most relevant to
you when you are arranging a mortgage. We then give you an outline of
the code's main commitments.
You can use this web page
as a checklist to help you through the process of arranging a
mortgage. |
Choosing
a Mortgage
There are three
different levels of service which your lender or intermediary may
provide 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:
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- 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;
- Information on
a single mortgage product only, if only one mortgage is available or
you have already made up your mind.
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| Check
that you understand which level service you are being offered, and what
this means for you.
Whichever level of
services they provide, your lender or intermediary should give you
information on all the following areas of the mortgage you are
considering.
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- 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 after any fixed or discounted period might be.
- Whether you
have to take any insurance services with the mortgage, and if so
whether the insurance must be arranged by the lender or 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.
- Mortgage
interest tax relief (MIRAS).
- Whether you
need to pay a high percentage lending fee, and if so what this means
to you.
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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.
Before your
mortgage is completed, your lender or intermediary will confirm, in
writing, the level of service they have provided, and the reasons for
any mortgage recommendation (if they gave you one). 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 has 10 main commitments. Broadly speaking, these say that
lenders and intermediaries will:
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- Act fairly and
reasonably with you at all times;
- Make sure that
all the 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 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.
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| The
code goes into more detail on each of these commitments. |
Keeping
to the Code
How the lenders or
intermediaries keep to the mortgage code is monitored independently.
And, any organisation under the code must be a member of a recognised
complaints scheme - such as the Banking Ombudsman, the Building
Societies Ombudsman, or the Mortgage Code Arbitration Scheme. This gives
you an extra level of protection, as each of these schemes can award
compensation of up to £100,000 to you if you suffer as a result of your
lender or intermediary failing to keep to the code. Your lender or
intermediary will be able to tell you which scheme applies.
Please ask your
mortgage lender or mortgage intermediary if you would like a copy of the
full mortgage code. |
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