 Mortgage
Terminology
There are a number of issues you need to be aware
of when taking out a mortgage. These include some of the terms used to describe
elements of the mortgage process and the different fees you may encounter. Some
of the most common are outlined below.
FEES AND CHARGES
These include:
•
Procuration
Fee - An amount we receive from the lender for placing a mortgage with it.
•
Reservation
Fee - In some cases, especially for new homes, you may be expected to pay a
reservation fee or deposit. You should
check whether this is returnable or
not and obtain a receipt from the builder, the developer or their agent.
•
Arrangement
Fee - Depending on the mortgage you eventually choose, some lenders may require
an arrangement fee to set up the
loan. Where we make a charge, we
will advise you of these costs in advance and confirm in writing.
•
Valuation Fee
- Before a lender will offer you mortgage funds, it will usually require a
qualified surveyor to inspect the property and to
submit a valuation report. This is
to ensure that the property is suitable for the loan requested; the report does
not necessarily give
you an indication as to the condition
of the property. If the property is new and building not completed, you may
have to pay an
additional fee for a second valuation
when it is finished.
•
Survey Fee -
In addition to the valuation fee, you may wish to have your own survey carried
out by a qualified surveyor; this can take
the form of a “Home Buyers Report” or
“Building Survey”. Most lenders will allow you to have this carried out at the
same time as
the valuation report, thus saving you
money.
•
Legal Fees -
Your solicitor or legal adviser will make a charge for both the sale and
purchase or remortgage of the house. We may be
able to obtain preferential terms.
•
Land Registry
Fee - This is a once-only charge to reimburse your solicitor or legal adviser
who carries out the registration work on
your behalf.
•
Local
Authority Search - This procedure, carried out by your solicitor or legal
adviser, is to check whether any official plans, decisions
or restrictions affect the property
you intent to buy. This may take some weeks.
•
Bankruptcy
Search - Your solicitor or legal adviser will undertake on behalf of the lender
a bankruptcy search on you and your partner
immediately prior to completion of
the purchase.
•
Stamp Duty
Land Tax - This is a Government tax imposed on most purchases of properties.
•
Telegraphic
Transfer Costs - It is usual for the lender to transfer your mortgage funds to
your solicitor’s or legal adviser’s bank by
telegraphic transfer. A charge for
this will be added to your final account.
•
Mining Search
- If you live in an area where mining has been or is likely to be carried out,
the lender may request your solicitor or
legal adviser to carry out an
appropriate search on its behalf.
•
Estate Agent
Fees - If you are selling your house through an Estate Agent, their fee will
normally be paid by your solicitor or legal
adviser on your behalf from the sale
proceeds. Estate Agent’s fees are not payable when you are buying a house.
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 re-mortgage, you may have to pay an early repayment charge,
which is a charge made by the lender.
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.
If you have an existing mortgage, your lender may
make a charge to cancel the current arrangements. With your written authority
we can find out the details from the lender on your behalf.
CHANGES IN PERSONAL CIRCUMSTANCES / PAYMENT
PROTECTION
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.
For your peace of mind, we will advise you how to protect your payments in the
event of sickness, accident or unemployment.
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. We
offer products from a single provider (PaymentShield underwritten by St. Andrews) For all other general
insurance products we act as Introducers Only.
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.
HIGHER LENDING CHARGE
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 Higher Lending Charge. Some or all of this fee may be used by the
lender, at it's discretion, to obtain higher lending charge insurance to act as
extra security for it’s 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 that is of
relevance to lenders. Lenders may refer to these agencies for information that
may assist them with 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 repayments fall into
arrears. They have a duty to advise you if this should occur.
Your home may be repossessed if you do not keep up repayments on your mortgage.
We can
either be paid commission by the lending institution or charge a fee for
Mortgage Advice. The amount of the fee will depend on your circumstances,
typically 0.5% of the loan amount.
| 
R.J.
Nash
Consultancy Ltd
