Guide to Understanding Your Mortgage Offer

Buying a home or switching your mortgage product is an exciting step, but understanding your mortgage offer is crucial. This guide will help you locate key details within your mortgage offer document so you can make informed decisions about your loan.

1. Loan Amount and Term

• Where to Find It: Section 3 – “Main Features of the Loan”
• Details Provided: The total amount you are borrowing, any fees added to the loan, and the duration of the mortgage.
• Example: “Amount and currency of the loan: £329,089.64 plus a fee of £999.00, term of 17 years 5 months.”

2. Interest Rate and Annual Percentage Rate (APRC)

• Where to Find It: Section 4 – “Interest Rate and Other Costs”
• Details Provided: Initial fixed or variable interest rate, what happens after the fixed period ends, and the overall APRC.
• Example: “An initial fixed interest rate of 4.89% for 24 months, followed by the Standard Mortgage Rate, currently 7.99%. The APRC is 7.5%.”

3. Monthly Payments

• Where to Find It: Section 6 – “Amount of Each Instalment”
• Details Provided: How much you will need to pay each month, how this may change after any fixed period, and worst-case scenario increases.
• Example: “Initial monthly payment: £2,349.28. After the fixed rate period, assuming no rate changes, monthly payment: £2,869.24.”

4. Early Repayment Charges

• Where to Find It: Section 8 – “Early Repayment”
• Details Provided: Fees if you repay the loan early or switch before the fixed period ends.
• Example: “Early repayment charge: 2% of the amount repaid in year one, 1.5% in year two. Example: £6,268.00 for a £313,375.09 loan.”

5. When Payments Are Due

• Where to Find It: “When your monthly payments are due” section in the main mortgage offer document.
• Details Provided: The due date and flexibility in choosing a payment date.
• Example: “Your monthly payment is due on the 1st of each month but can be made on any day up to the 28th.”

6. Overpayments and Underpayments

• Where to Find It: Section 9 – “Flexible Features”
• Details Provided: Whether you can make extra payments without penalties or temporarily reduce payments.
• Example: “Overpayments: You can make overpayments up to 10% of your original loan amount per year without a charge.”

7. Mortgage Porting (Transferring to a New Property)

• Where to Find It: Section 9 – “Flexible Features”
• Details Provided: Whether you can move the mortgage to another property without an early repayment charge.
• Example: “You have the right to transfer this product to a new mortgage with Nationwide on another property, subject to lending criteria.”

8. What Happens if You Miss a Payment?

• Where to Find It: Section 12 – “Non-Compliance with Commitments”
• Details Provided: Possible consequences, including fees and repossession risks.
• Example: “Failure to keep up repayments could lead to repossession. If you struggle to make payments, contact us immediately.”

9. Complaints and Contact Information

• Where to Find It: Section 11 – “Complaints”
• Details Provided: How to make a complaint and escalate if needed.
• Example: “If you are not satisfied, you can contact the Financial Ombudsman Service at financial-ombudsman.org.uk.”

10. Validity of Your Offer

• Where to Find It: “How long this offer will be valid for” section in the main mortgage offer document.
• Details Provided: The deadline to accept the offer before it expires.
• Example: “This mortgage offer is valid until 4 July 2024. If you do not confirm before this date, the offer may no longer be available.”

Final Advice: Always read your mortgage offer carefully and ask questions if anything is unclear. If in doubt, consult your mortgage advisor or lender for further clarification.