Can’t repay your mortgage? What to do?

What should you do?

■ Do something now – the problem won't go away

The sooner you contact your mortgage lender to discuss your difficulties, the better. They need to
know if there are specific reasons why you cannot make the payments.

■ Contact your mortgage lender for help

All mortgage firms regulated by the FSA have to take into account their customers’ circumstances and treat them fairly. If you are in arrears, your lender will have a set procedure for dealing with your case. Contact them to find out if they can help you.

■ Get advice

It may be a good idea to get some free and independent advice. Various advice agencies specialise in this area and can help you plan how to solve your problem.

■ Do a personal budget

(advice agencies may be able to help you with this – see Useful contacts ). This is a list of your income and spending and will help you see where your money is going and plan your future spending.

Use this plan so that you pay all your essential spending commitments such as the mortgage, utility bills (gas, electric, water), insurances, council tax and housekeeping first.

■ Pay what you can

Even if you cannot pay the full monthly payments, continue to pay what you can afford. Your mortgage lender is more likely to be sympathetic if you can show you are willing to make an effort to pay something – this may significantly increase your chances of keeping your home.

■ Consider changing the way you repay your mortgage

If you have a repayment mortgage and your difficulties are short term, you could ask your mortgage lender to accept interest-only payments for a time. This means you will not be paying anything off the capital amount. You will then need to catch up on your payments towards the capital at a later date.

■ Tell your mortgage lender what you are doing

Your mortgage lender will be better able to respond to your difficulties if they understand the action you are taking.

Link to Previous article: Can you afford a mortgage or Loan

Can you afford a mortgage or loan? - II

What can you do now to help protect yourself against the risks of changes in your circumstances and interest rate rises?

■ Plan your budget based on what you might have to pay in future as well as the initial cost
– don’t forget to include all your household expenses, such as buildings and contents insurance premiums and council tax.

■ Try not to take the maximum mortgage on offer – just because you can afford it now, doesn’t mean you can afford it in the future.

■ Think about whether you need a fixed rate so that you know your mortgage payment will stay the same for a given period – but don’t forget that if rates fall, your payment won’t.

■ Build up your savings so that in an emergency (for example, if you lose your job) you can still afford to pay your mortgage and bills for a short time. Compare rates on savings accounts on FSA’s comparative tables, newspapers or websites.

■ Work out how long you could live on your savings if you lost your job.

■ Check what benefits your employer will provide if you became ill.

■ Insurance – various products can insure you in the event of redundancy, critical illness, or accident. You should consider these but make sure they meet your needs: there are restrictions on when and how much they will pay out. Make sure you understand the limitations of any policy and how it protects you. For information on all types of insurance, see the Association of British Insurers (ABI)

Information Zone at www.abi.org.uk.

If you do get into difficulties

Talk to your lender if you cannot meet your mortgage payments – they will have a set procedure for dealing with your case.

State benefits – may be available but may cover you only after an initial waiting period; for example:

■ you won’t qualify if you have a joint mortgage and only one of you loses your income;

■ you won’t qualify if you have savings of more than £8,000;

■ you may only qualify for help nine months after you become unemployed (unless you took your mortgage out before October 1995);

■ payments will only cover the ‘interest’ part of the mortgage; and

■ there is a limit on the amount of mortgage that qualifies.

Link to Previous article: Can you afford a mortgage or Loan

Can you afford a mortgage or loan?

Taking out a mortgage is one of the biggest financial commitments you can make, both in
terms of the amount you borrow, and the time you may take to repay it.

Are you sure you can afford it?

You may be able to afford the repayments now, but if you borrow a large amount over a long
period of time think what could happen if, for example, your income falls or you lose your job. Or what if interest rates rise and your monthly repayments go up?

How could your income fall?

Your income could fall if:
■ you lost your job, or had to take a drop in income;
■ you or your partner stopped work to have a child or to look after a dependant; or
■ you became ill and couldn’t work.


Could you keep up your mortgage payments if your income falls?

How could your mortgage payments go up?

■ Your mortgage payments to your lender could go up (or down) if interest rates change.
Mortgage interest rates are related to the interest rate set by the Bank of England and your lender will usually apply some or all of any change to your mortgage.
■ Unless your mortgage rate is fixed for the full term of your mortgage, this will affect you.
■ Often, special rates are for a set period only, so when this comes to an end your payment will change – it could be much higher. Although interest rates have been stable over the
past few years, this could change. In the past, interest rates have risen from 7.5% to 15% in just a few years. Interest rate rises could increase your monthly payments considerably, making it difficult for you to afford them.

The following examples show how different interest rates can affect your payments.

Example 1: repayment mortgage

You borrow £100,000 over 25 years on a repayment mortgage, initially at a rate of 4%:



Example 2: interest-only mortgage
You borrow £100,000 over 25 years on an interest-only mortgage, initially at a rate of 4%:

As you can see clearly, there is a significant difference in the mortgage repayment money in the two schemes.

Don’t forget that rates could be higher than those assumed here.

In the next article, let’s cover some more details of the mortgage affordability.

Link to Previous article: Important Contacts for mortgage & Loans

Important Contacts

Here are a few important contacts that you may find useful to approach while finalizing your mortgage loan.

Call rates may vary – check with your telephone provider for their charges.

To order other Moneymadeclear guides, check the Register or for general information or guidance

Financial Services Authority (FSA)
Consumer Helpline: 0845 606 1234
Minicom/Textphone: 08457 300 104

www.moneymadeclear.fsa.gov.uk

Other Moneymadeclear guides

Getting financial advice
• You can afford your mortgage now – but what if...?
• What to do when you can’t meet your mortgage payments
• Making a complaint

On this website you can find
A mortgage calculator to help you estimate your monthly mortgage payment – www.moneymadeclear.fsa.gov.uk/ tools/mortgage_calculator.html

Tables to help you compare products like savings accounts and mortgages – www.fsa.gov.uk/tables

A budget calculator to help you work out if you have enough money coming in to cover your bills – www.moneymadeclear.fsa.gov.uk/ tools/budget_calculator.html;

Insurance information – www.moneymadeclear.fsa.gov.uk/ products_explained/insurance.html

Financial advertising
To report misleading adverts and other promotions call 0845 730 0168



Association of British Insurers (ABI)020 7600 3333 www.abi.org.uk

For information on insurance products

Council of Mortgage Lenders (CML)020 7438 8956 www.cml.org.uk

For leaflets on buying to let, equity release and home buying in England, Wales or Scotland

Brokerfinder01398 331780 www.brokerfinder.co.uk

Mortgage broker search

Ethical Investment Research Service
www.eiris.org

Ethical mortgages and insurance

Finding a financial adviser

IFA Promotion0800 85 3250 (freephone) www.unbiased.co.uk
Provides a list of 8 independent financial advisers in your area

Institute of Financial Planning
0117 945 2470 www.financialplanning.org.uk

Financial planners can help you to achieve your goals by planning your finances.

MyLocalAdviserwww.mylocaladviser.co.uk
Online only – no telephone number. For a mortgage, insurance or investment adviser in your area.

The Personal Finance Society www.thepfs.org/findanadviser

Link to Previous article: Checklist for getting a mortgage & Loan

Checklist for getting a mortgage

Getting a mortgage

Step no. 1

When you are ready to apply for a mortgage read the KFI and check that you understand all the features of the mortgage. Whether or not you take advice, you should still do your best to ensure that the mortgage is right for you.

Step no. 2

After you apply the lender will assess your application by valuing the property, checking your identity, and assessing whether you can afford the mortgage.

Step no. 3

You will then get a mortgage offer document and an updated version of the KFI. Compare this with the original KFI. This is your final chance to check you are happy with all the terms and conditions of the mortgage. If anything is unclear or if there are differences you don’t understand between the KFIs, talk to the lender.

Step no. 4

Before you accept the offer make sure you read and understand the mortgage offer document. Ask the lender to explain anything you don’t understand. Don’t sign until you’re sure the mortgage is right for you.

What to do if things go wrong with your mortgage?

If something goes wrong, the first thing to do is to contact your adviser or lender to put it right. They must follow a set of procedures when dealing with complaints. If you’re not satisfied with their response, you may be able to take the matter to the Financial Ombudsman Service. The adviser or lender will give you details.. If you can’t pay your mortgage, talk to your lender – they have a set procedure for dealing with this.

For more information read our guide What to do when you can’t meet your mortgage payments.
You may be able to get State benefits – but sometimes only after an initial waiting period.

Link to Previous article: Common questions about Mortgage & Loans

Common Questions about Mortgage & Loans

Here is a list of Common Questions about Mortgage & Loans, that each individual can have:

How can I prepare for buying a property?

• Plan your budget based on the most you may have to pay for a mortgage.
• Try not to take the maximum mortgage on offer – always think from the point of view of affordability
• Think about whether you need a fixed rate so your mortgage payment will stay the same for a set period.
• Build up your savings.
• Work out how long you could live on your savings if you lost your job.
• Check what benefits your employer will provide if you get ill.
• Consider taking out insurance in case you are made redundant, get critically ill, or have an accident.
• Use Mortgage calculator on the Mortgages section of the website
• You can work out how much a change in interest rates would affect your own loan.

How can I review my mortgage?

You’ll get a statement at least once a year. Check to see what you’re paying, when any special deals end, and the balance of the mortgage left to pay

Am I still on a special deal or has it ended?

Check your statement to see if you are still on a good deal, note when this finishes, and remember to review it again closer to this time.

Does my mortgage have an early-repayment charge?

Check the KFI. Your annual statement will also show if there is an early-repayment charge and when it ends – make a note of the date, in case you want to switch to a new mortgage.

Should I switch my mortgage?

You can change your mortgage to get a better deal – known as switching. You can shop around every few years to make sure you are getting a good deal. You don’t have to move house to move your mortgage.

Switching can cut your monthly payments. But you’ll need to weigh up these monthly savings or other benefits against the costs of making the switch.
Get a KFI for mortgages that you are interested in, and check that you will save money by switching.

What will be the switching cost for me?

Especially in the early years, your mortgage might have early-repayment charges. These can be hefty if you are still on a special deal, such as a fixed, discounted or cashback mortgage. Even if there are no early-repayment charges, your lender might make an administration charge – this could be quite expensive.

If you are switching to a new lender, they must value your home and there will be legal costs to pay. With some mortgage deals, the lender will pay these fees for you.
Make sure you get back the costs of switching before any special deal ends – for example, in less than two years if you switch to a two-year discounted rate.

If you are switching lender, check whether they will charge you interest to the end of the month even if you pay off the mortgage earlier by switching. If they do, make sure you switch your mortgage at the end of the month.

Remember that if a deal has no fees, the rate might not be as good as one that does.

MOST IMPORTANT: If you’ve found a good deal, it’s worth going back to your existing lender to see if it will offer you a similar deal to keep you as a customer. Don’t hesitate to tell your existing lender that you have spotted a better offer elsewhere, so will he be able to match that offer.

Link to Previous article: Jargon Buster for Mortgage Loans

Jargon buster for mortgage loans - I

Continuning further from our previous article on Mortgage features - various kinds of mortgage features-2, Here is a list of terms that are frequently used in the mortgage and loans business.

Advice
A recommendation about the most suitable mortgage for you made by an adviser who is regulated by the FSA.

Annual statement
A statement from your mortgage lender, sent every year, showing among other things what you've paid and what you still owe.

Approval in principle
A certificate which some lenders will give you that shows the amount they will probably be prepared to lend you. This is not a guarantee, but can be helpful when signing up with estate agents.

APR
Annual Percentage Rate. This shows the overall cost of a loan, taking into account the term, interest rate and other costs.

Authorised firm
A firm that has permission from the FSA to carry out regulated activities.

Buy-to-let mortgage
A loan you take out to buy a property which you intend to rent to tenants.

Capital
The amount you borrow to help buy your home.

Capped mortgage
A mortgage that has a maximum limit on the interest rate you'll have to pay during a special deal period.

Cashback mortgage
A mortgage that comes with a cash sum (often a percentage of the amount you're borrowing).

Compare products (mortgage tables)
Use our impartial tables to compare mortgages from a wide range of lenders.

Collared mortgage
A mortgage with a minimum interest rate you'll pay during a deal period.

Deposit
The amount of money that you're putting into buying a home (not including the mortgage money you're borrowing).

Discounted mortgage
This has a discounted variable rate of interest for a set period, after which the rate will increase.

Early repayment charge
A charge you may have to pay if you break off a mortgage deal - by paying it back early and/or moving to another lender.

Fixed rate
An interest rate that is fixed (ie it doesn't move up or down) for a set period of time.

FSA
The Financial Services Authority - the UK's financial services regulator.

Income multiples
The factor by which your earnings are multiplied to find out how much you can borrow.

Interest
The charge made by lenders when you borrow their money.

Interest rate
The figure that determines how much interest you pay. Usually linked to the Bank of England's rates and can move up or down.

Interest-only mortgage
A mortgage where you only pay the interest charges of the loan each month. This means you are not reducing the loan amount (or capital) itself, and this will need to be repaid in some other way.

Continue to Part II of Jargon Buster

Jargon buster for mortgage loans-II

This is II part of the article Jargon buster for mortgage loans. Please start reading this article from the first part before continuing with this one.

Keyfacts documents
Standard documents that all authorised lenders and brokers must give you to explain their services and details about the mortgage you're interested in.

Loan-to-value
The percentage of money you want to borrow compared to the cost of the property.

Mortgage
A loan which is secured against your property.

Mortgage broker
A mortgage broker helps you understand the various mortgage types and deals available to them. A mortgage broker may recommend a mortgage for you or they may provide you with information to enable you to make your own choice.

Register
A list of firms that are regulated by FSA to carry out financial services in the UK. You can check online to see whether a firm is regulated by FSA.

Remortgaging
The process of changing your mortgage for a different one, without moving home.

Repayment mortgage
A mortgage that pays off both the home loan and the interest at the same time. Make all the payments and the mortgage will be fully repaid.

Stamp duty
A tax which home buyers must pay on properties above a government set figure.

Standard variable rate mortgage
A loan at the lender's normal mortgage rate - ie without any discounts or deals.

Secured
A mortgage is a secured loan on your home; this means that if you fail to repay it, your lender may be able to sell your home to get its money back.

Survey
A report on the condition of the property you are planning to buy.

Tracker mortgage
A mortgage with an interest rate that is usually linked to a particular rate that is set independently from the lender and moves up or down with it.

Term
The length of your mortgage.

Valuation
A brief inspection, for the benefit of your lender, of the home you hope to buy. This is to make sure they are not lending more than the property is worth and that the property is suitable security for the mortgage, but this will not tell you if it is a good or bad buy. For your own peace of mind, you may want your own survey.

Previous article: Mortgage features - various kinds of mortgage features-2

Mortgage features - various kinds of mortgage features-2

This article is in continuation to the previous article Mortgage features - various kinds of mortgage features. Please read the first part before continuing with this one.

Offset mortgage

With an offset mortgage, your main current account or savings account (or both) are linked to your mortgage and are usually, but not always, held with the mortgage lender. Each month, the amount you owe on your mortgage is reduced by the amount in these accounts before working out the interest due on the loan.
So as your current account and savings balances go up, you pay less on your mortgage. As they go down, you pay more.

Current account mortgage

A current account mortgage is similar to an offset mortgage in that it offsets the balance of your savings against your mortgage. However, in this case, rather than your mortgage and current account being separate pots of money, they are usually combined into one account. This means that the account acts like one big overdraft.

Look at Section 4 of the keyfacts document about this mortgage document to see whether it is a current account or offset mortgage and whether you have to take a current account offered by the lender as a condition of the mortgage.

Is an offset or current account mortgage right for you?

-Possibly, yes, - if you are a higher rate taxpayer, have substantial savings to offset and like the idea of built-in flexibility to make overpayments and underpayments.

-Possibly not, if after paying your deposit you don't have much left in savings and if other mortgages have a lower interest rate or other features that are more important to you.


Top tips
-Read the keyfacts document and use it to compare costs and features of other mortgages available.
-Look for the APR figure alongside the interest rate.
-Use our Mortgage tables to help you compare costs and features of mortgages available
-Don't forget that discounts and special deals are temporary, and rates can go up when they end.

Link to previous article on Mortgage features - various kinds of mortgage features .

Mortgage features - various kinds of mortgage features

Mortgages offered in the UK markets can have different features. For example, here is a list of typical features that you'll find:

--cashback mortgages
--flexible mortgages
--offset mortgages
--current account mortgages

Look at Sections 4 and 12 of the keyfacts document about this mortgage which will explain the features of the mortgage.

Cashback mortgage

This may be offered with some kind of interest-rate deal. The mortgage lender pays you a substantial sum (for example 3-5% of the amount you borrow) shortly after you take up the mortgage loan. If you move to another lender in the early years you'll have to repay some or all of the cashback received.

Is it right for you?

May be yes, if you need a large cash sum - for example, to buy house furnishing like furniture, or you expect the sum to more than compensate for any interest-rate rises during the penalty period.
Possibly not, if you can manage without the cashback now and can get a better overall deal elsewhere.
So ultimately it’s your call, you have to decide and predict whether you may get a better deal later and whether you would like to switch later.


Flexible mortgage

A flexible mortgage gives you some scope to change your monthly payments to suit your ability to pay. It's also useful if you want to pay off your loan more quickly. Several flexible features are becoming common and they aren't limited to mortgages with 'flexible' in their name. Here are some flexible features:
--Overpayments - you can pay more than your normal monthly mortgage payment or pay off a lump sum, or both.
--Underpayments and payment holidays - you pay less than the normal monthly payment for a limited period (say six or twelve months). You may even be able to stop making payments altogether. This could be useful if, say, you lose your job or take time off to care for a child.
--Borrow extra (loan drawdown) - you can borrow extra without further approval from your lender, provided the total loan does not go above an overall limit. Alternatively you may be able to 'borrow back' against earlier overpayments.

Is a flexible mortgage right for you?
Possibly, yes, if you are likely to use these features, for example if you're self-employed and have a variable income.
Possibly not, if you are unlikely to use these features. A less flexible mortgage may be cheaper or more suitable for you.


Let’s discuss the Offset and Current Account Mortgage in the following article.

Link to Previous article on Types of Interest rate deals on Mortgages.

Types of interest rate deals

In this article, we present a detailed description of the type of interest rate deals that you can explore for you mortgage and loans. Some content presented in this table is taken from the official sites of FSA, hence the information is correct as on the date of publication of this article on mortgage and loans. Please consult your financial advisers in case of doubts.

Type of interest rate deals	How does it work	Charges if you repay early	What in it for you?
Standard variable rate	Your payments move up or down with the lender's own mortgage rate, which is usually driven by the Bank of England's base rate.	Not usually, but check and see.	-- Usually you can leave your lender without any penalties or problems. -- You're in control. You can usually pay back extra amounts (and cut your interest costs) without a penalty. -- It moves with interest rates. So if interest rates go up, so will your monthly payment. -- It will almost certainly be expensive compared to other deals. -- The lender may not reduce, or may delay reducing, their variable rate even if the Bank of England rate goes down.
Tracker rate	A variable rate loan with an interest rate that's at a set amount above or below the Bank of England or some other base rate, set independently from the lender. It tracks (moves up or down with) that rate.	Sometimes during any special deal period and maybe even after the period too.	-- It can pay to go for a tracker if you can afford to pay more when interest rates go up, in exchange for benefiting when they go down. -- It's not a good choice if your budget won't stretch to higher monthly payments.
Discounted interest rate	Your monthly payments can go up or down, but you get a discount on the lender's standard variable rate for a set period of time. At the end of the deal, you usually change over to the standard variable rate.	During the special deal: yes, almost always. They can apply even after the end of the special deal period as well.	-- It gives you a gentler start to your mortgage, at a time when money may well be tight. But you must be confident you can afford the payments when the discount ends. -- The discount period is limited, so don't get used to those early low repayments. -- You may not be able to make overpayments and pay off the loan early without penalties -- The lender may not reduce, or may delay reducing their variable rate even if the Bank of England rate goes down.
Fixed interest rate	Your payments are set at a certain level for an agreed period. At the end of that period, they'll usually switch you to the standard variable rate.	During the special deal period: yes, almost always. They can apply even after the special deal period, too.	-- Your payments will stay the same in that period, even if interest rates go up. -- This gives you the security of knowing that you can afford your payments and will make it easier for you to budget. -- If rates go down, you won't benefit. Your payments will stay at the higher rate. -- You may not be able to make overpayments and pay off the loan early without penalties.
Capped rate	Your payments are variable and often linked to a base rate, but fixed not to go above a set level (the 'ceiling' or 'cap') during the period of the deal. At the end of the period, you are usually charged the lender's standard variable rate.	During the special deal: yes, almost always. They can apply even after the end of the special deal period as well.	-- You know the maximum you will pay for a set period of time. -- Useful if you want the security of knowing that your payments can't rise above the set level, but still benefit if rates fall.
Collared rate	May be used in conjunction with a capped rate or a tracker (or both). Your payments are variable but will not fall below a set level (the 'collar').	Not usually, unless it is used in conjunction with a capped rate or a special-deal tracker rate (or both). But check and see.	-- It may be part of another interest-rate deal which otherwise appears attractive. But note that if the rate payable is only just above the 'collar' and you think rates will fall, you may not get the full benefit of a reduced payment.

Previous Article:Remortgage Cost

Remortgage Cost

Continuing further from the previous article on Remortgage: Changing your mortgage plan, let's today talk about how much it will cost you for remortgaging.

What will remortgage cost you?
Even if there are no early repayment charges, your current lender might make an administration charge (sometimes known as an exit administration fee).
If you're switching to a new lender, they will insist on the same legal work your old lender did, to make sure the property offers proper security for them.

Lenders may also want an up-to-date valuation on your property.
With some deals the lender may pay some of these as an incentive to get your custom. But bear in mind you may have to pay back their value if you pay off your mortgage early.
Remember, when you've found a good deal, it's worth going back to your current lender to see if they will offer you a similar deal to keep you as a customer. This will save you some bother in moving on and maybe some money too.

Top tips
- Check your annual mortgage statement to see what you've paid and what's outstanding.
- Review your mortgage whenever a special deal ends.
- Don't assume that your current lender will keep you up to date with their best deals.

Remortgaging – changing your mortgage plan, not your home

Today, let’s start a new topic which is quite common practice for UK home owners – REMORTGAGING. Remortgaging means you change the mortgage plan, either switch to another mortgage plan from the same mortgage firm, or take a new mortgage scheme from another mortgage lending firm. In either case, your home remains intact – you only switch you mortgage plan or scheme on the same home or house.

Once you've gone through the process of finding your mortgage - you probably won't be in a great hurry to do it all again!
However, a year or two down the line, it can be an expensive mistake NOT to look around the mortgage market to see what's on offer. Mortgage lending firms work hard to attract new customers, but often aren't so good at making sure their current borrowers continue to get the best deal.

Should you look around now?
- If you're already on a special deal, then you should probably not worry about remortgaging. The penalties you'd have to pay to break the deal, and the other costs involved, may be quite high and it may mean there's no point in remortgaging.

- But if you're paying your lender's standard variable rate and there are no penalties involved you should certainly look at what else is on offer.

Find your most recent mortgage statement – your mortgage lender or mortgage firm will send you a statement once at least each year - which will tell you what you're paying now, and how much you still owe. It will also tell you where early repayment charges apply and the date they stop.

Are you getting a really good scheme to switch?
Use the information in your statement to compare your mortgage with others, both from your current lender and from other lenders. You can use any online Mortgage tables to compare features and rates.
You can then go directly to the lenders, or visit a mortgage broker and get a keyfacts document about this mortgage document for the mortgages you're interested in, so you can check you'll save money by switching.

General Mortgage Fees and Mortgage Costs

In the previous article, we talked about the Mortgage Fees and Mortgage Costs . They were the details that are usually mentioned in the keyfacts document. However, there are still a lot more things that need to be know, which are usually not listed in the keyfacts document.

These won't be listed in the keyfacts documents.
Fee or charge	What's it for?	How much?
Estate agency fee	Marketing and selling your home.	Typically 1-3% of the selling price; ask for a quote and shop around.
Stamp duty land tax (known simply as stamp duty)	Tax payable to the government when you buy a home. Make sure this is in your budget if it applies to you - the cost can be high. It is the buyer who pays stamp duty, not the seller.	Varies depending on purchase price of property see HMRC website.
Legal fees	Paid to your solicitor to represent you, negotiate for you, and carry out the necessary searches, land registry and so on. This is also known as conveyancing.	This usually will vary according to the firm. Budget for at least £400 and possibly more. Ask for quotes.
Survey fee	Your lender will carry out a valuation visit (see above), but this is only a very basic inspection. You may want a Homebuyers report or a structural survey if you want a detailed report on the condition of the property.	This will vary according to the surveyor, the size of property and the type of report you need. Ask for quotes.
Removal costs	Moving all your belongings from your old home to your new one.	Costs will vary, although you can save money by packing up everything yourself. Ask for quotes.

It becomes very important that you know the above mentioned fees and costs for your mortgage. Otherwise, once you finalize the mortgage deal and later you will discover that you are required to pay all these charges, it may hurt you in big way financially.

Here are some Top tips
1. Look at your keyfacts about this mortgage document for fees you must pay.
2. Use our checklist so you are aware of the costs involved.
3. Shop around for quotes – you can often save money.

Mortgage Fees and Mortgage Costs

In this article, we will discuss about the various fees levied when you opt to take a mortgage. Some of the fee is charged by various people involved in the process, while some goes to the government in the form of stamp duty, etc.

While all the mortgage or loan related fee and costs will be set out clearly in the keyfacts document about the mortgage document that the lender or mortgage broker gives you, there'll be other costs you'll need to pay for. These include stamp duty, real estate agency fees and the lawyers' fees.

Often you can add certain fees charged by the broker or lender to the mortgage and pay them back over time with your monthly payments. But if you do this, remember that they will cost a lot more in the long run because of the interest that you will have to pay for taking the option to pay in the long run. If you want to do this, ask your lender or broker to give you a keyfacts document about this mortgage on this basis and one without the fees added, so you can compare what you'll pay.

All mortgage-related fees will be set out in the keyfacts documents. They may include any of the following:
Fee or Charge	What is it charged for?	How much can it be
"Mortgage advisor or broker fee (if you use one)	For arranging the mortgage or giving you advice.	This depends on the broker, but if they charge (some don't) they must tell you in the keyfacts about our mortgage services document.
Mortgage or Loan booking fee or arrangement fee	A fee charged by the mortgage lender, usually to reserve your mortgage funds or to cover the distribution/administration costs of processing your mortgage loan. For some lenders, the fee may also be linked to special deals with a lower initial interest-rate.	This varies, but £200-£700 may be a typical amount. Where the fee is linked to a special deal it may be even higher, £2,000-£3,000 or more. These large fees can significantly increase the overall cost, particularly if you add the fee to the loan – and so pay interest on it. Use the total cost information in section 5 of the keyfacts about this mortgage document to find out the overall cost.
Valuation fee	This is the fee a mortgage lender may charge for a valuation of the property to assess whether it is appropriate security for the mortgage.	This varies from lender to lender, and on the value of the property.
Higher lending charge	If you're borrowing a high percentage of the value of the property, the lender may charge a fee to take out insurance cover. This protects them in case you can't pay back your loan and they have to sell your house at a loss.	This will depend on how much you borrow, and how much you're contributing as a deposit.
Fee for making your own buildings insurance arrangements	A fee charged by a lender for the administration costs of checking there is sufficient buildings insurance cover if you do not insure your property through the lender.	Typically £25 but may be payable yearly or each time you change insurer.
Telegraphic transfer fee	A possible charge from your lender if you need them to transfer the mortgage funds to your solicitor on the same day.	Typically £40-£50.
Re-inspection fee	Sometimes a lender will need to re-inspect the property after the original valuation, usually to check if you've made agreed repairs.	Typically £50-£100.
Early repayment charge	If you repay all or part of your mortgage earlier than the agreed term.	This may not always apply, but section 10 of the keyfacts about this mortgage document will give an explanation of when it applies and cash examples. Check the terms and conditions of the mortgage for full details.
Early repayment charge	If you repay all or part of your mortgage earlier than the agreed term.	This may not always apply, but section 10 of the keyfacts about this mortgage document will give an explanation of when it applies and cash examples. Check the terms and conditions of the mortgage for full details.
Fees to repay the mortgage (known as exit administration fees)	A fee to your lender when you repay your mortgage, even if you are not repaying it early.	Typically £75-£300 (plus any early repayment charge, if applicable).

Mortgage Term: How long does a mortgage last?

As far as the regulations are concerned, there is no limitation about the right length (term) to a mortgage. The standard term is around 25 years, and most of us tend to have a mortgage throughout our working lifetime. With the large sums involved, this spreads the cost and makes your monthly payments more manageable.
However, you can choose a different term if it suits you and the mortgage lender and you agree that you can afford it. If you can afford a shorter term you may have higher monthly payments but overall you pay less in total (see table below). With a longer term, you may pay less each month but more in total. As a general rule, the sooner you get rid of your mortgage loan, the better it will be and the less it will cost you.
Ask for keyfacts documents about this mortgage documents showing different mortgage terms and use Section 5 to compare the total cost of a mortgage over different terms. You can also use an online Mortgage calculator to see how different mortgage terms will affect your monthly payment.
Avoid making any financial commitments that go past the age you retire unless you're sure you'll be able to afford the payments.
Example of how the term alters the cost of a repayment mortgage if interest is 6% a year

Mortgage term in years	Monthly payment for a £100,000 repayment loan	Total amount you'll repay, including the amount you borrowed
10	£1,110	£133,200
15	£843	£151,740
20	£716	£171,840
25	£644	£193,200
30	£600	£216,000
Interest calculated monthly

Top tips

1. Remember that a mortgage should fit comfortably with your earnings and your commitments.
2. Don't take out a mortgage that runs past your retirement, if you're not certain you will be able to afford it.

Buying Mortgages, Info you will be given

Continuing further from our previous article Getting Help/Advice with Mortgage Loans, lets today discuss what all info you can expect when you are about to buy mortgage plan.

Whether you take advice or not, you should get two ‘keyfacts’ documents from your mortgage lending firm or their advisers. This information is important because it explains the service you will receive and helps you to compare different mortgage products or different loan products

The KEY FACTS document about the mortgage service:
This is an important document and it will explain you the service being offered and:
· Whether you’ll have to pay for it – and if so how much;
· Whether the firm offers products from all the companies, products from a limited number of companies, or products from a single company. If you want information or advice based on the full range of product schemes; choose a firm that offers products from all companies; and
· Whether the firm offers advice. Not all firms are interested and have expertise in offering advices regarding the products that they offer. If you want advice make sure that the firm can provide this service before making an appointment with the firm.
Use this article to help you look around & choose the service you want and the firm you want to deal with.

The KEY FACTS document about this mortgage (KFI):
This is another important document and is also called Keyfacts illustration document or KFI document.

You will be given a KFI document if you ask for a written mortgage quotation, whether or not you opt to get advice. This is because it is the basic document that summarises the most important features and costs of the mortgage in a standard way so that it becomes easier for you to compare it with other similar mortgages plans or loan schemes.

To help you shop around, ask for a KFI only when you know clearly how much you might want to borrow and the type of mortgage you want to buy. By comparing KFIs for different mortgage plans, you can work out to know which one is the best for you.
Your lender or mortgage adviser from the mortgage firm must always give you a KFI before you apply for a mortgage, so you can make sure it’s right for you.

Help Advice with mortgage loans

It is but obvious that we, the common citizens, will find it really difficult to understand complex mortgage loan plans and we may not be able to understand every single detail of the mortgage scheme. Hence, there is a clear requirement for seeking help with the financial jargon so that we can get a clear idea of what is going on with our mortgage plan.

So, where to get the advice for your mortgage or loan?

One of the best places to get details about mortgage deals and clarity is on the internet, like this website. However, as this website and others may contain some links for advertisement from the mortgage lending companies, it is possible that you may not be able to get the clear details of the plan. So please be careful while buying schemes on the internet. Buy it online only when they are clear to you regarding their terms and conditions.

Another major benefit of buying mortgage online is that it may save you a lot of money and you can easily compare different schemes online.

Continuing further with getting help on mortgages, there are other mediums also for getting advices. When you ask about a mortgage from a mortgage company, the lender or mortgage adviser from that company will usually give you some information. This information may be included and be distributed through printed leaflets, and the person you speak to may describe the mortgage or service. But this doesn’t mean you’re getting advice specific to your needs and circumstances, because sometimes these individuals may try to promote the mortgage plans that may not be necessarily the best that fit your requirements, but the ones that are more profitable for the mortgage lending company.

If you’re not clear or certain about which loan or mortgage is right for you, then consider getting advice.

Buying mortgage with advice
Only FSA-regulated firms and their agents are legally allowed to and should give advice about mortgages, and these firms must follow the standards set by FSA when dealing with a mortgage customer. So check their authenticity that they are regulated, and therefore on the Register of FSA, before you finalize a deal with them.
As per the FSA rules, a customer have a right to expect the adviser to recommend only products that is suitable for you.
If the mortgage or loan product they recommend to you is unsuitable for your specific needs and circumstances based on the information you gave them, you can complain to the firm and expect compensation for any loss.

How to select a mortgage plan:

While choosing or selecting a mortgage requires some careful planning and clear thought process. If one has to list down certain points that one should keep in mind while going for a mortgage, it can be listed as follows:

• One should take or borrow what one can afford to pay back – use a mortgage calculator to help you plan your mortgage better instead of just making certain assumptions and ending up in a financially distressed situation. Don’t get tempted and overstate your income to get a bigger mortgage or loan. You may end up with a loan you can’t afford to pay back at all. You’ll also be committing a financial crime and could get your name registered for a criminal record.
• You should realize and understand the difference between ‘repayment’ and ‘interest-only’ options and how do they work, and what you must do to ensure you pay off your mortgage at the end of your mortgage term. Please have a look at the following link to know the difference between ‘repayment’ and ‘interest-only’ options and how do they work
• You should realize and understand that the interest-rate deals on the mortgage or loan offer that you select, and the advantages and disadvantages of the loan offer. Make sure you know when a special deal or offer will come to an end, what changes that may have on your repayment money and think how you will make your repayments when they do increase
• You should get the legal documents of terms and condition about your mortgage or loan from your adviser or lender – and read them thoroughly by giving clear consideration. These contain important information that are legally required for the mortgage firm or loan firm to give you about their loan or mortgage service, as well as the costs and features of the loan or mortgage that you take from them.