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Mortgages. Mortgage Guide. Finding the right mortgage for you - PDF
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1 Mortgages Mortgage Guide Finding the right mortgage for you
2 We are here to help you whether you re thinking of buying your first home, buying an investment property, looking to move or considering remortgaging. Your home may be repossessed if you do not keep up repayments on your mortgage. If you have a buy-to-let mortgage and you fail to keep up with payments on your mortgage a receiver of rent may be appointed and/or your rental property may be repossessed.
3 Contents Part 1 Introduction page 4 Practical help from Skipton page 5 The different types of mortgages page 6 What mortgage is right for you? page 9 Valuing the property page 11 Repayment methods page 12 Life cover page 14 Part 2 3 Introduction page 15 How much can you borrow? page 15 Foreign currency loans page 16 Understanding your mortgage costs page 17 Other Skipton benefits explained page 19 Protecting your home page 21 Other information to consider page 21 The Skipton Mortgage Interview Process page 24 Jargon buster page 28
4 Part 1 General mortgage information Most of us would like to own a property which usually means having to take out a mortgage. Choosing the right mortgage can be confusing because there are so many lenders and so many different types of mortgages. On top of this, the house buying process can seem daunting, particularly if you are buying a home for the first time. Your mortgage is likely to be one of the largest financial commitments of your life, so it s important that you get the right mortgage for you. Help is at hand from Skipton Building Society with a range of mortgages for every home and every pocket, we can help you choose the right one. It s also important that you fully understand the implications of your financial and legal commitments, especially in terms of the mortgage you are taking and how much you will be paying. 4
5 Part 1 General mortgage information Practical help from Skipton We want to help you make the most of your money. This includes advising and supporting you when you are looking to; buy your first home move home buy an investment property move your mortgage to a new lender (remortgage) for existing borrowers - taking out additional borrowing or making changes to your mortgage. We consider lending on most types of properties in England, Wales and Scotland. Certain types of property construction may not be acceptable - we will let you know as soon as possible if this is the case. We are unable to provide new mortgages for debt consolidation or capital raising for business purposes. We will listen to your priorities and take you through our mortgage process step by step, using plain English, in a friendly, relaxed, no pressure environment. As a mutual and one of the UK s top four building societies, our customers always come first. How to apply for a new mortgage You can start your application for a mortgage in the following ways: Over the phone by contacting Skipton Direct on Obtain a Decision in Principle (DIP) online. You can complete a DIP in 10 minutes, simply follow the on screen instructions. 5 You will then be able to arrange a full mortgage appointment with our qualified, telephone based mortgage advisers in Skipton Direct, who will be able to identify a mortgage to suit your personal circumstances. We provide an advised mortgage service which includes: Advice and recommendation an adviser will take all the necessary information and recommend a product from our range which is most suitable for your needs.
6 Part 1 General mortgage information Help every step of the way Once your mortgage application is in progress, you will find that we continue to provide the same level of care and attention that we did when you started your application. We want to make sure that your purchase, remortgage, additional borrowing or changes to your mortgage proceed in a way that is easy and as problem free as possible. These steps include; gathering information about your needs an efficient application process quick decisions. We will continue to provide help when you need it. You can also access a wide range of information online at skipton.co.uk/mortgages. 6 The different types of mortgage products There are many different types of mortgages available. As a major building society, we will offer, from time to time, all or some of the mortgage types described in this leaflet. All of our mortgages come with a number of additional benefits which are highlighted in the section Other Skipton benefits explained on page 19. Our mortgage advisers in Skipton Direct will be happy to give you any further information you need. In general, there are the following types of mortgages: Fixed Discounted Tracker. The next section describes how these different mortgage types work. Please make sure you read page 9 which details what rate your mortgage would change to at the end of the product deal and read the relevant Mortgage Rates and Features Guide to see which options Skipton currently has available and for details of our current rates.
7 Part 1 General mortgage information Fixed Rate Mortgages With a fixed rate mortgage, the monthly interest rate (and therefore your monthly mortgage payment) will stay the same for a set period of time, typically this will be approximately two, three or five years. At the end of the fixed rate period your rate will usually change to a lender s variable rate. You are guaranteed that your rate will be exactly the same every month for the duration of the fixed rate term even if other interest rates rise during this period. You can confidently plan your budget for the whole period, because you ll know in advance exactly what your monthly outgoings for your mortgage will be. If interest rates fall during the fixed period, the amount you pay during the fixed rate period will not change, so you may end up paying a higher rate of interest than if you were on a variable rate mortgage. Discount Rate Mortgages Your payments are based on a discounted rate set at a certain level below a lender s variable rate for a specific period of time, which means your payments may go up or down. For example, a 1% discount for 12 months off a lender s variable rate of 5% would mean a pay rate of 4% for 12 months. As the lender s rate is variable this means that your rate and payments could go up and down during the discounted period. 7 Sometimes these discounts are stepped over a period of time, for example, a discount of 2% in the first year followed by a discount of 1% in the second year. At the end of the discount period your rate will usually be changed to a lender s variable rate. This type of mortgage often provides you with lower payments in the early years to help with the cost of moving or setting up in your new home.
8 Part 1 General mortgage information Tracker Mortgages On a tracker mortgage, your interest rate is directly linked to an external rate, such as the Bank of England base rate (BoEBR) for a set period of time. For example, your rate may be 1.5% above the BoEBR for a period of three years, from completion of your mortgage. Your rate will reflect the external rate being tracked. This means when the external rate falls, you will benefit from the rate reduction during the tracker period but if the external rate increases then so will your rate. These changes also affect monthly payment. Some products have floors, below which the interest rate cannot fall. Further Details For further details of our current products, please ask for our Mortgage Rates and Features Guides. Before you apply for your mortgage we will provide you with a personalised Mortgage Illustration, including details of your mortgage payments for the loan requested. 8
9 What mortgage is right for you? Part 1 General mortgage information When reviewing different types of mortgages, it is important that you consider the whole deal. You need to pay particular attention to what you will be paying during and at the end of the initial product period because your payments may increase. For example, if interest rates have risen sharply during your initial product period and remain high, your mortgage payment could be significantly higher when your initial product period ends making it more difficult for you to afford the monthly payments. Our mortgage advisers will talk you through this and will look at affordability after the product deal ends too. Interest rates when Skipton product deals end The three main variable rates our product deals move onto are either our Standard Variable Rate (SVR), a Base Rate Tracker (BRT), or our Mortgage Variable Rate (MVR). These rates may change by different amounts at different times. Which rate you move onto depends on when you applied for your product deal and will be shown on your mortgage offer. Details of the three rates, including the ceiling on the SVR (SVR Ceiling), appear in the table below. The rates shown in this table were last set on 1 October Separate SVRs and MVRs exist for both Residential and for Buy-to-Let mortgages, and may change by different amounts at different times. Current rate: Relates only to product deals applied for: Ceiling: SVR BRT MVR (Residential or Buy-to-Let) (Residential or Buy-to-Let) Residential Buy-to-Let 4.95% (variable) Set by Skipton Building Society from time to time. Before 30 December Guaranteed not to be more than 3% above BoEBR unless exceptional circumstances apply (SVR Ceiling). The SVR Ceiling currently does not apply due to exceptional circumstances, but will be reinstated if exceptional circumstances cease. 4.95% (variable) Tracks Bank of England Base Rate %. On or after 30 December 2009, but before 14 November None. If the SVR Ceiling is reinstated, it will not apply to BRT products. 4.99% (variable) 5.19% (variable) On or after 14 November None. If the SVR Ceiling is reinstated, it will not apply to MVR products. Notes: (1) Rates quoted currently include a direct debit discount of 0.25%. Where payments are not made by direct debit, the rate will be 0.25% higher. (2) Rates quoted may be subject to any product ceilings or floors in place any such ceilings or floors will be detailed in your mortgage offer. (3) Exceptional circumstances apply when either the Base Rate is less than or equal to 2.7% or the Base Rate minus the UK average Instant Access Savings Rate (as published by the Bank of England) is less or equal to 2.25% for each of the three preceding months. The circumstances will remain exceptional for as long as either one of these tests continue to be satisfied.
10 Part 1 General mortgage information Product deals on additional borrowing, porting and switching applied for on or after 14 November 2012 Additional Borrowing where you borrow more money, secured against your property, on top of your existing mortgage. Additional borrowing applied for on or after 14 November 2012 moves onto MVR at the end of any product deal period, even if your existing product(s) are on, or will move onto, SVR or BRT. Your additional borrowing will not benefit from the SVR Ceiling, if it is reinstated. Porting where you transfer the terms of your existing mortgage product(s) to a new property. If your existing product is on, or will move onto, SVR or BRT, any option to port that mortgage enables you to port the same rate to your new property, even after 14 November 2012 (subject to underwriting criteria). If, on or after 14 November 2012, you apply to port and take out additional borrowing above the balance of your existing mortgage, that additional borrowing will move onto MVR at the end of any product deal period. This additional borrowing will not benefit from the SVR Ceiling, if it is reinstated. 10 Rate Switch where you switch onto a new product from your existing lender without moving home. Since 14 November 2012 you can only switch to a product which moves onto MVR at the end of any product deal period. If your existing product is on, or will move onto, SVR or BRT and you switch, you will not be able to switch back later to SVR or BRT. The new product will not benefit from the SVR Ceiling, if it is reinstated. If you have any questions about this and how it relates to your mortgage, please contact us on Mix and match options Whatever your circumstances, with Skipton you can choose to split your mortgage borrowing between more than one product, to suit your personal requirements. For example, you may want to take part of your loan as a fixed rate and the remainder on a variable discount or tracker rate. Please note that in such cases, the highest product fee on the products chosen will apply.
11 Valuing the property Part 1 General mortgage information Before making you a formal mortgage offer, we will need to do a valuation to make sure the property is worth the agreed price and is suitable to lend against. The cost of this valuation will depend on the price of the property and we may ask you to pay this charge with your application. There are three levels of survey: Basic Mortgage Valuation this is carried out on behalf of the mortgage lender and is only designed to meet the lender s requirements. It is not a survey and it doesn t guarantee that the property is free from defects. Homebuyer Report this is intended to provide an overview on the general condition of the property. Generally, a surface examination of the parts of the property that are visible and readily accessible is carried out, and services are inspected but not tested. This report will also include the Basic Valuation for the lender s purposes. Building Survey this is also known as a full structural survey and will give you a complete overview of the property s structure and identify any defects. Building Surveys tend to be carried out on older properties, listed buildings or buildings that have any unusual constructions. Again, this report will also include the Basic Valuation for the lender s purposes. This is normally the most expensive type of survey. 11 If any of these surveys reveal any problems, you may want to get a builder or other expert to assess what the repairs would cost, and use this as a basis for negotiating a lower price with the seller. If you are in any doubt about the suitability of the property, it maybe worthwhile to opt for a more detailed report. We offer free basic valuations as standard on remortgage cases, and occasionally on purchases with specific mortgage products. Energy Performance Certificates (EPCs) An EPC, which reports on the energy efficiency of a property, is provided by the seller, or their agent. An EPC is not required to market the property initially, however, the seller or their agent must have commissioned (requested) an EPC before marketing the property and an EPC must be provided by the exchange of contracts at the latest. The seller will still be required to pay for the EPC and every effort should be made to receive it within 28 days. There will be fixed penalties for those failing to comply with their duties. It will not form part of any valuation report.
12 Part 1 General mortgage information Repayment methods You will need to have paid off your mortgage by the end of the term. It is important for you to understand that your mortgage is made up of two main components; the capital sum (i.e. the amount you borrow to buy your home), and; the amount of interest due on the capital sum over the term of the mortgage (e.g. 25 years). Repayment (capital and interest) Your monthly payments cover both the repayment of the capital sum borrowed and the interest due on your loan. In this way, you gradually pay off the full amount of your mortgage over the agreed term, including interest. In the early years, your payments will be geared more to paying off the interest, whilst in later years, most of your payments will be repaying the capital sum. As long as you make all the monthly payments and pay any fees or other costs that have been added to your loan, you can be certain that the whole loan will be repaid by the end of the term. 12 Interest-only With an interest-only loan, your monthly payments cover only the interest due on your loan. As you will only pay the interest, your monthly payments will be lower compared to the repayment method, but you will also need to take into account the cost of repaying the capital sum at the end of the mortgage term. By taking the interest-only option your mortgage balance will not decrease, so there will be more interest overall to be paid, compared to the repayment method. Interest-only repayment strategy We will only enter into a mortgage contract where all or part of the contract is on interest-only basis if; you can provide evidence that a clearly understood and credible repayment strategy is in place as far as it is reasonably able to assess at the time of underwriting, your repayment strategy has the potential to repay the capital borrowed. We will not lend to First Time Buyers on an interest-only basis, and there are restrictions on the level of loans which can be taken on interest-only along with different minimum income requirements.
13 Part 1 General mortgage information We accept two types of repayment strategies: An endowment policy provided by a regulated firm The latest annual statement must be provided as evidence that the sum due to be paid on maturity based on the medium projection is equal to or in excess of the proposed amount of mortgage borrowing. The policy is not deposited with or assigned to us. Defined types of assets Evidence must confirm that the value of your assets at the time of underwriting is equal to or in excess of the proposed amount of mortgage borrowing. Acceptable assets are: Equity in another residential property in the UK^ UK shares and bonds held as investments Cash savings in a UK deposit account If you are buying an investment property or a buy-to-let, the property itself may be an acceptable asset. ^Buy-to-let property owned in your name is acceptable. Buy-to-let property owned in a company name is not acceptable. Equity in commercial property is not acceptable. 13 Savings must be personal and not business related. You must be aware that the value of investment plans can go down as well as up and cannot be guaranteed on maturity. It is your responsibility to make sure you have enough money to repay the loan at the end of its term. You should regularly review your repayment strategy to ensure it is on track to repay your mortgage. Length of mortgage term Traditionally a mortgage would be expected to last 25 years but, in some circumstances, it could be more appropriate for you to take a shorter term or even a longer one. For example, a shorter mortgage term of say 15 or 20 years may be worth considering if you can afford it. A longer term repayment mortgage would enable you to reduce your monthly payment. Your payments will be higher if your term is shorter, but this may substantially reduce the amount of interest you pay on the loan. You also need to consider the length of the term in relation to your retirement when your income is likely to reduce. This may impact on the term of the mortgage that would be available. For all mortgages, except business buy-to-let we will make recommendations on this. For business buy-to-let we will discuss the options available to you.
14 Part 1 General mortgage information Life cover Our range of life cover options can give your family the financial support they ll need if something should happen to you. We have teamed up with Legal & General to provide life cover which is designed to pay a lump sum to your loved ones in the event of your death and allows you to make sure your family is protected during the policy term. You choose the amount of cover you need and the length of time you want to be insured for (your premiums will never change unless you change the amount of cover held under the policy or alter the plan, allowing you to budget with confidence). You can choose from a range of cover options based on your individual circumstances and budget: Life Insurance A life insurance policy helps to provide financial support for your family that could be used to cover regular financial commitments. 14 Critical Illness Cover Critical illness cover is an additional option, which will pay out a lump sum on diagnosis of one of the specified critical illnesses covered. Mortgage Life Insurance Mortgage life insurance helps to pay off an outstanding mortgage in the event of death, meaning your loved ones won t need to worry about how they ll pay the mortgage. Speak to one of our team on to make sure you have the right cover to protect you and your family.
15 Part 2 More about Skipton products and services This section provides you with further details about the products and services we offer, as well as highlighting some of the other costs that you need to consider which may be forgotten in the excitement of buying a property. You will find tools to compare your current income and future expenditure, which will in turn help both you and your mortgage adviser determine the mortgage payments that you can realistically afford. In addition, we outline a number of other benefits that our mortgages have, such as flexibility. We explain the different options open to you for protecting your home, and guide you through some of the confusing mortgage jargon that you may come across. How much can you borrow? If you are buying a property you will usually need to provide a deposit of at least 10% of the property value yourself, although this may be different for some lenders from time to time. The amount you could borrow from us will be assessed by your mortgage adviser at the time of your application. 15 Bear in mind you will also need to budget for a number of one-off costs at the time of your purchase. These costs could include; valuation fee Local Authority search fee conveyancer s legal costs Stamp Duty Land Tax estate agent costs. Key household items such as; appliances furniture carpets/curtains decorating materials.
16 Part 2 Skipton products and services If you are looking to remortgage, costs that may be payable could include early repayment charges and mortgage exit administration fees associated with your current mortgage. You should also think about the impact any lifestyle changes or increases in your cost of living will have. What you can afford now and in the future The amount we actually lend is based on an overall assessment of affordability which takes into account your income, your expenditure and how you could manage future interest rate rises. We may then be able to lend you the amount you require. NB: Please be aware that our lending policy may vary from time to time and our mortgage products can be withdrawn at short notice. Any mortgage offer we make to you will normally be valid for six months and is not transferable to different properties, should your intended purchase not proceed. Some specific products may be subject to different terms and these will be detailed in your mortgage offer. We also have criteria about the type of properties we lend on. You should discuss our criteria with your mortgage adviser. 16 Foreign currency loans A foreign currency loan is a loan where you are resident outside the UK or the monies you will rely on to repay your mortgage are paid in a currency other than sterling. Like a number of other lenders, we do not offer any form of new or additional lending (including porting of products to a new property or changes of ownership to your property) which are foreign currency loans. The foreign currency rules do not affect you if there is any future product switch or other contract variation such as change to the term of your mortgage or your method of repayment.
17 Understanding your mortgage costs Part 2 Skipton products and services Below are some of the costs associated with a mortgage application that you need to be aware of. More information is available in our Tariff of Mortgage Charges (which is available on request or at skipton.co.uk). Application fee An arrangement charge payable upon application for your mortgage. This fee is nonrefundable and may vary between products. Completion fee This covers our work in the setting up of the mortgage when the money to buy your new home is released to the seller or when your remortgage completes. Your mortgage adviser will discuss with you whether you wish to add this fee to your loan on completion. To avoid incurring interest, you can elect to pay it up front. This fee is product specific and may vary between different mortgage deals. Valuation fee 17 A report will be required to establish the value of the property, and you may be asked to pay for this. We will require this report before making the loan available. This report is for the lenders purposes only. For purchases, we will provide you with a copy of the report. If you are purchasing a property, please contact us if you require a more thorough Home Buyers Report or a Building Survey. A mortgage valuation alone may not be suitable for your needs. Full details of the different surveys are available on page 11. Electronic Transfer We send the mortgage loan to your conveyancer by electronic transfer and there is a charge of 6 which you can debit to the account on completion, or pay up front. Higher Lending Charge (HLC) Some lenders charge a HLC if you are borrowing a high percentage of the valuation or purchase price of the property. This is to provide your lender with extra security if you cannot pay your mortgage and your property is taken into possession and sold for less than you owe.
18 Part 2 Skipton products and services This charge is normally made on borrowing that exceeds 75% of the valuation or purchase price, although some lenders, including Skipton, will pay this on a customer s behalf. The HLC is designed to protect the building society, of which you will be a borrowing member, but it does not protect you individually. You will remain liable to pay all the money owing, including arrears, interest and our legal fees. If a claim is paid to us under third party insurance, paid for out of the HLC, the insurers will normally have the right to recover the amount from you. The HLC is a one-off charge. It will not be refunded if you pay your mortgage off early. If you exercise portability and take another mortgage (see page 22), a further HLC may apply. Deposit You will need to pay as a deposit the difference between the amount you are borrowing and the price of the property. This is likely to be the biggest expense for first-time buyers. Buyers already on the property ladder, who have a house to sell at the same time, can often use some of the equity built up in the house being sold. Loan to Value (LTV) 18 LTV is expressed as a percentage and is the proportion of the loan compared to the property value or purchase price. For example, if you borrowed 75,000 and your house was worth 100,000 then your LTV would be 75% plus your deposit of 25% (i.e. 25,000). Typically, the higher the loan to value, the greater the risk to the lender, so the rate on the mortgage is likely to be higher to reflect this. Conveyancing costs You will need to employ a conveyancer (solicitor or licensed conveyancer) to handle the legal aspects of buying your home or remortgage, if this is with the aid of a mortgage. The conveyancer usually acts for you and the lender. The costs your conveyancer deals with on a purchase, which you will be required to pay, include: Stamp Duty Land Tax a tiered government tax on the price you pay for your home (Land and Building Transaction Tax in Scotland) Search costs the cost for carrying out searches on your behalf such as with the Local Authority and Land Registry.
19 Part 2 Skipton products and services Your conveyancer will also charge you for the work they carry out such as; dealing with enquiries drafting contract for sale/reviewing contract on purchase arranging completion/preparing the document which transfers legal ownership. (These costs will not be included in your Mortgage Illustration). When remortgaging, most lenders will offer these services for free. Please see page 20 for details of the Skipton Remortgage Conveyancing Service. Other Skipton benefits explained Daily interest We calculate your mortgage interest on a daily basis. This means that every time you make a payment of any size the amount on which interest is calculated is immediately reduced. This could save you hundreds, even thousands of pounds over the life of your mortgage, if you make overpayments. 19 Overpayments You can make overpayments over and above your regular contracted monthly payment at any time. By making regular overpayments of even a modest amount, you could significantly reduce your mortgage term and save yourself thousands of pounds as a result. For example, on a 100,000 repayment mortgage with interest at 6%, over a term of 25 years, paying an extra 25 a month means you could pay off your mortgage a year and 11 months earlier and save yourself 8,887 in interest payments! As some of our mortgage deals may include early repayment charges if overpayments are made, please discuss this with your mortgage adviser if this is a benefit you would like to take advantage of.
20 Part 2 Skipton products and services Payment holidays Your Skipton mortgage allows you to take payment holidays once you have had your mortgage with us for six months and if you have previously overpaid. You will need our prior agreement so give us at least 14 days prior written notice. As long as you have had no arrears, the holiday proposed would not take the loan to value above 95% and there are sufficient surplus payments to cover the holiday, you may take up to three consecutive months holiday. You cannot take more than a total of six months in any 12 month period. Of course, whilst you do not need to make payments during the holiday, interest will continue to be added to your account and your balance will increase. Cashback From time to time, Skipton may offer products that include an element of cashback. If your product has cashback then this will be released to your conveyancer after completion of your mortgage. Skipton Remortgage Conveyancing Service At Skipton, we can offer you our Skipton Remortgage Conveyancing Service. Here s how the service could help you: 20 If you re moving mortgages but not moving home, then you won t usually have to pay anything for the legal costs involved. In other words, it s free to you as we pay the standard legal costs. Please refer to our Skipton Remortgage Conveyancing Service leaflet. By using the Skipton Remortgage Conveyancing Service, we will deal with your particular needs without a legal meter running. NB: Please be aware that legal work relating to certain matters not usually involved in a standard remortgage is not included in this offer e.g. transfers of equity or deeds of postponement. The conveyancers will offer fixed prices for certain elevated services, please ask your mortgage adviser for further details. Your Title Documents With the exception of Scotland and Northern Ireland, the Society no longer holds packets of title documents. We will ask your conveyancer to return any deeds and documents to you after your mortgage completes. Full details of individual mortgage related charges which apply to your loan will be included in your Mortgage Illustration. Our Tariff of Mortgage Charges leaflet shows other charges which may apply. The leaflet is available on request and will be included with any Mortgage Offer made. It is also available at skipton.co.uk.
21 Protecting your home Home Insurance At Skipton Building Society we offer solutions for all your home insurance requirements through Arthur J. Gallagher (UK), using a panel of Insurers. For further information see our Insurance Brochure, or speak to an adviser. Part 2 Skipton products and services NB: You must have a buildings insurance policy in place to cover your home in order to take a mortgage with Skipton. Other information to consider Early Repayment Charges what they are and how they work An Early Repayment Charge (ERC) may be due if you pay back all, or part, of your loan (over and above your contracted monthly payments within the product deals period), or you choose to switch products before the product deal ends. 21 Most of our residential mortgages allow you to repay up to 10% of the original loan each year, without charge, even those where an ERC is normally payable. This allowance does not apply if you repay the mortgage in full. Any charge that is made is calculated as a percentage. Please refer to your Mortgage Illustration and Mortgage Offer for full details of any ERCs which may apply. Product switch fee (pre completion) If our mortgage rates change during the mortgage application process and you wish to change your product onto one of these new rates before your mortgage completes, you will be required to pay a product switch fee. This fee will be payable prior to the change in product and is charged in addition to any other product fees payable at application and/or completion. The fee covers Treasury and administrative costs incurred by the Society. Details of this fee can be found in our Tariff of Mortgage Charges.
22 Part 2 Skipton products and services If you move house Our mortgage products may be portable. This means you may be able to transfer your product to the mortgage on your new home. If you complete on your new loan at the same time as you redeem your existing loan no early repayment charge will be payable. It is not always be possible to simultaneously complete on your new loan, therefore if you complete on your new loan within six months of redeeming your existing loan, any early repayment charge will be refunded shortly after completion of the new loan. If the balance of the loan is reduced when you move you may have to pay an ERC on the reduction. Of course, both you and your new property must fulfil our Lending Criteria at the time of your move in order for a new mortgage to be approved. (Depending on the Loan to Value of your new property, you may have to pay a Higher Lending Charge (HLC) at that time). Subject to you and your new property meeting the Lending Criteria, you can also top-up the amount of your loan on another product. APRCs 22 APRC stands for Annual Percentage Rate of Charge which is the overall cost of your mortgage expressed in a standardised way. This helps you compare the cost of different loans over the whole term. It may seem obvious, but a loan with a lower APRC is cheaper overall than a loan with a higher APRC. An APRC for each product is shown in the Mortgage Rates and Features Guides to help explain the total cost for comparison purposes. However, your Mortgage Illustration will include the APRC specific to your own loan requirements, which may differ slightly from the APRC shown in the Mortgage Rates and Features Guides. The APRC in the Mortgage Illustration takes account, amongst other things, of; the amount borrowed and the term of the loan the interest rate you pay (including the rate you pay after any initial product period) charges which you have to pay, such as application/completion fees, valuation fees and discharge fees when and how often you have to pay the interest and charges any Higher Lending Charge.
23 Part 2 Skipton products and services It is important to be aware that APRCs are only a snapshot of the total cost of a loan at a particular time. All the known information is included in the calculation, such as the current levels of interest rates and charges, any planned changes such as the ending of incentive periods and then worked out over the term. What APRCs cannot predict are changes in the variable rate throughout the term and the effect of any other changes that might occur, such as overpayments. Whilst using APRCs to compare the cost of different loans, don t forget to consider how much you will have to pay each month and whether you can afford that amount. Additional Borrowing - For existing Skipton customers Many people have a wish list of things they d like, such as an extension to their property, a new kitchen or a new car. Others have more of a to think about list for things like university fees or even a place in the sun. Additional Borrowing could be the key to making things happen. If you decide to apply for Additional Borrowing then you need the following information available; details of your gross and net income details of your household monthly expenditure details of your household, life and family protection insurances details of any other mortgages details of personal debt such as loans, credit cards etc. 23 Once you have spoken with an adviser, if you meet our Lending Criteria and decide to go ahead with applying for Additional Borrowing, your mortgage adviser will explain what you will need to provide. Please remember, all monies received through Additional Borrowing will be secured against your property and your overall mortgage balance and payments will increase.
24 Part 2 Skipton products and services 24 The Skipton mortgage interview process Our mortgage telephone based interview process will go through all the initial details that support your mortgage application to provide an indication of the decision. The process involves: Call a member of the Skipton Direct team or obtain a Decision in Principle (DIP) online You will be asked a number of questions about your personal circumstances (this information will be recorded in a Customer Needs Questionnaire CNQ) Your affordability will be assessed A Skipton Direct mortgage adviser will work with you to establish which mortgage best suits your needs and make a recommendation A Mortgage Illustration for the recommended product will be prepared for you to consider If you are happy with your Mortgage Illustration you will proceed to application and will need to pay any required fees. Your Skipton Direct mortgage adviser will tell you what documentation will be required to support your application. These may include; fully completed and signed CNQ which then becomes your application form latest three months bank statements showing credits from employer and one months debits to current lender (if applicable) current lender s latest annual statement (if applicable) latest one full month payslip latest P60 latest two years finalised accounts/sa302 (self-employed only) application/valuation fee (as applicable) address/identity documents (see overleaf) details of any life policies and home insurance policies (if you have also had a insurance review).
25 Part 2 Skipton products and services Proving your identity When you apply for a mortgage with Skipton, we will ask you for proof of your name and address. This is to comply with anti-money laundering and prevention of crime regulations, which apply to all regulated banks and building societies. Please remember, whoever you apply for your mortgage with whether it is a building society, bank or other financial organisation they are all, by law, obliged to carry out checks on your identity and address. If you are unable to provide any of the standard identity documents there are others that we may be able to accept. Please let us know your situation and we ll try to help. You will need to provide us with originals of one item from Section A and one from Section B and a third item from either Section A or Section B for both single and joint applicants. You will be advised of how to provide us with this information at the time of your appointment. List A Proof of who you are (Personal ID) Current signed UK passport Current UK full or provisional photo-card driving licence Current full EU photo-card driving licence Current full (not provisional) UK (old-style, paper based) driving licence 25 HM Revenue & Customs tax notification1 Evidence of entitlement to state benefit, pension, tax credit, etc.1 Armed forces/police ID card EU member state ID card1 Signed firearm s certificate UK residence permit. List B Proof of where you live (Address ID) Utility bill (mobile phone bill not acceptable)1 Council Tax bill for current billing year Current UK full or provisional photo-card driving licence Current full (not provisional) UK (old-style, paper based) driving licence Bank or building society statement showing address1 Recent mortgage statement
26 Part 2 Skipton products and services Evidence of entitlement to state benefit, pension, tax credit, etc.1 Official letter from a government agency, DVLA, HMRC, JobCentrePlus, NHS1 Care home letter signed by an appropriate authority Council Tenancy Agreement Court appointed instruction (Probate or Court registered Power of Attorney) Currently listed on voter s roll section of credit search at current address (either opted-in or opted-out). 1 Must be the most recently issued and less than three months old (except water bills less than twelve months old). What to do if in payment difficulties If you can see a situation arising where you are likely to be unable to make your monthly mortgage repayments, or are unable to make the payments on the agreed monthly date, or you are unable to make any payments, maybe due to redundancy, then it is most important that you talk to us as soon as possible. Call the Credit Management Team on We will then work with you to see what can be done for the best the earlier you get in touch the better. To obtain a free information leaflet on our policy on treating customers in arrears fairly, please contact the Credit Management Team on or go online at skipton.co.uk/arrears. Complaints procedure Let us know what you think Making sure our members are happy matters to us. So if you think we could improve our products or services, or have a complaint, please let us know. What will happen if you complain? Your complaint will be acknowledged within five working days of receipt We aim to resolve complaints within eight weeks Once an assessment and full investigation of your concern has been made, we will respond with a decision.
27 Part 2 Skipton products and services Most of our customers concerns can be resolved quickly but occasionally more detailed enquiries are needed. If this is likely, you will be contacted with an update and we will give you an expected date of response. This will not be beyond 20 working days from when you first make your complaint. The final decision must be given within eight weeks of receiving your initial complaint. What should you do if you are disappointed with any aspects of the handling of your mortgage? 1. If your complaint relates to the service provided by Skipton Building Society please contact the Customer Relations Team, Skipton Building Society, Principal Office, The Bailey, Skipton, North Yorkshire, BD23 1DN or telephone If after making a complaint you are still unhappy and you feel the matter has not been resolved to your satisfaction please contact the Financial Ombudsman Service. Postal address Exchange Tower, London, E14 9SR, or telephone Please note that the Ombudsman will only consider your complaint if you have already given us the opportunity to resolve it. Whilst we are bound by the decision of the Financial Ombudsman Service (FOS), you are not. Following the complaint procedure does not affect your right to take legal action. 27
28 Part 2 Skipton products and services Jargon buster Buying a property and moving home can be difficult enough even if you have done it before, so you don t want to be confused by the terminology and abbreviations used during the process. Here s our simple guide to beating the jargon. Additional secured borrowing Sometimes called second charge borrowing. This is where a lender offers a loan secured on the property which, if your property is sold, will be paid off after a First legal mortgage. Skipton does consider additional borrowing but only where we hold First legal mortgage. Annual Percentage Rate of Charge (APRC) An indicative guide to help you compare the cost of different mortgage deals, taking account of interest rates payable (both during the initial product period and after) and fees. Bank of England Base Rate (BoEBR) This is the rate which is set on a monthly basis by the Monetary Policy Committee (MPC) of the Bank of England and is the rate that it charges for its borrowing. Binding offer The Society will issue a binding offer following the receipt of an acceptable mortgage application. 28 Conclusion of Missives The point at which both buyer and seller are legally bound to the purchase (Scotland only). Completion The point at which the money is released to remortgage your home or to buy your new home. Your conveyancer will ensure that ownership is transferred to you enabling you to move. This is known as Settlement in Scotland. Consumer Buy-to-let (CBTL) From 21 March 2016 CBTL contracts will be offered to customers who are assessed as not acting wholly for a business purpose when they apply for a Buy-to-let mortgage. Conveyance The legal document which transfers ownership of unregistered freehold land, in England and Wales. Disbursements The fees your solicitor has to pay to others on your behalf e.g. Stamp Duty Land Tax, Land Registry fees, search fees. Electronic Transfer This is the method by which your mortgage advance is paid to your conveyancer. Equity The positive difference between the value of your property and the amount of any outstanding loans secured against it (i.e. the amount you own outright).
29 Part 2 Skipton products and services First legal mortgage Also known as a first charge mortgage. This means that the loan takes priority over any other borrowing secured on your property, if your property is sold the first charge will be paid off first. Foreign currency lending Lending where, at the start of a new contract, a customer is not a UK resident or relies on income or assets which are not pounds sterling to repay the mortgage. We do not offer foreign currency lending. Key Facts Illustration (KFI) This document was replaced by the Mortgage Illustration in December Mortgage brokers and other lenders may still use a variant of the KFI. For more information see Mortgage Illustration. Lease A document which grants possession of a property for a fixed period of time and sets out the obligations of both parties, landlord and tenant, such as payment of rent, repairs and insurance. LIBOR London Inter-Bank Offered Rate. The interest rate that the banks charge each other for loans (usually in Eurodollars). Loan Sometimes called the advance. This is the actual amount of money that we agree to lend you. Loan to Value (LTV) This is the value of your loan as a proportion of your property s value. For example, if you were purchasing a home for 100,000, and had a deposit of 15,000 then you would need to borrow 85,000. This would mean that you would require a mortgage product that offered an LTV of at least 85%. 29 Missives The formal written offer to purchase and the acceptance (Scotland only). Mortgage Illustration Introduced in December 2015, this document replaced the KFI. This document, or ones similar to it, must be provided to you by law and shows you all the key information you need when choosing a mortgage. You can use it to compare different mortgages with different lenders. Porting The process of transferring your existing Skipton mortgage product to a new property. All of the terms and conditions of your mortgage product remain the same but the mortgage is moved onto the new property that you are purchasing. When you port your mortgage you may require additional borrowing and for this you may require an additional mortgage product. Redemption Administration Fee (sometimes called a Mortgage Exit Fee) A fee charged by the lender for releasing the legal charge over your property following repayment of a mortgage. Redemption Administration The process of moving your existing mortgage to a new lender without moving home.
30 Part 2 Skipton products and services Reflection period This is a formal period of time which allows you to consider a mortgage offer. The reflection period does not affect how long your offer is valid for. Repayment Strategy This is the means by which you choose to pay off the capital on an Interest Only mortgage when the mortgage term comes to an end. You need to check with us to make sure that your chosen repayment strategy is acceptable to us. Searches For example, enquiries made at the Land Registry, the Land Charges Register and local authorities to ensure there is nothing to cause concern about the property. Subject to Contract A provisional agreement made between buyer and seller, before exchange of contracts, which allows either side to back out without penalty (England and Wales only). Term The length of time over which your mortgage loan is to be repaid. Title The legal right to ownership of a property. Title Deeds The documents showing the ownership of property. Transfer Deed The legal document which transfers ownership of registered land. 30 Vendor/Seller The person(s) selling the property.
31 Part 2 Skipton products and services 31 Skipton Home Insurance is administered by Arthur J. Gallagher (UK), The Walbrook Building, 25 Walbrook, London, EC4N 8AW. Arthur J. Gallagher (UK) is a trading name of Heath Lambert Limited (HLL).The Home Insurance policy is underwritten from a panel of insurers. HLL is authorised and regulated by the Financial Conduct Authority. All panel insurers are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Life Cover is provided and administered by Legal & General Assurance Society Limited, who are authorised by the Prudential Regulation Authority and Regulated by the Financial Conduct Authority and Prudential Regulation Authority.
32 Your home may be repossessed if you do not keep up repayments on your mortgage. If you have a buy-to-let mortgage and you fail to keep up with payments on your mortgage a receiver of rent may be appointed and/or your rental property may be repossessed. Skipton Building Society is a member of the Building Societies Association and Financial Ombudsman Service. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority under registration number for accepting deposits, advising on and arranging mortgages and insurance. Principal Office, The Bailey, Skipton, North Yorkshire BD23 1DN. Stock Code: _306485_02/12/15