The Mortgage Code
By giving you this leaflet, 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:
 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.
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 leaflet concentrates on the details which are 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 leant 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:
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 for 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 tied 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.
Before your mortgage is completed, your lender or intermediary will confirm, in writing,
the level of service they have provided. 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 has 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.
The code goes into more detail on each of these
commitments
Lenders and intermediaries will make sure that their staff are appropriately trained,
qualified. experienced and supervised.
Lenders will follow the Council of Mortgage Lenders' policy on mortgage shortfall debts.
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 Financial Ombudsman Service 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.
Contact details
The Mortgage Code Compliance Board University Court
Stafford ST18 OCN
For enquiries, please contact our help desk
Telephone:01785 218200
E-mail: enquiries@mortgagecode.org.uk
You can also get more information about the Mortgage Code Compliance Board from our
website at:
www.mortgagecode.org.uk
Please ask your mortgage lender or
mortgage intermediary
if you would like a copy of the full mortgage code. |
