October 2004 Version 3
and an Introductory Guide
This booklet includes a copy of the Conditions which apply to
Direct Line Mortgages for properties in Scotland only.
The Conditions form part of any Mortgage Agreement with Direct Line.
This booklet also contains an introductory guide to Direct Line
Mortgages which does not form part of the Conditions.
You should read this booklet carefully before
accepting any Loan Offer from Direct Line.
Please keep it for future reference.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT
KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Introductory Guide 2
YOUR DIRECT LINE MORTGAGE PART ONE:
AN INTRODUCTORY GUIDE TO DIRECT LINE MORTGAGES
The first part of this booklet offers an Introductory Guide to Direct Line INCLUDING SOME THINGS YOU SHOULD KNOW BEFORE YOU
Mortgages which are simply referred to in this Guide as ‘Mortgages’. DECIDE TO TAKE OUT A DIRECT LINE MORTGAGE
It contains important information, including information about our products, our About Direct Line
services, our lending guidelines, what it means to have a mortgage on your We are a direct lender, which means all our contact with you is by phone,
home, how and when you must make repayments and, how we calculate and internet or post, rather than face to face. When we need you to sign documents,
charge interest. we will send them to you by post. We have no branch network. That makes our
organisation very streamlined and economical, and we pass on the resulting
The second part of the booklet contains the Conditions which apply to your savings to our customers.
Mortgage. These Conditions, together with the Loan Offer and the Standard
Security, form the contract between you and us (the Mortgage Agreement). We provide a number of different types of Mortgages. The range which we offer
may change from time to time. You can find out about our current range by
When you take out a Mortgage with us, we will ask you to sign a Loan Offer phoning us or on our website www.directline.com. Whatever type of
saying that you have read and agree to the Loan Offer and our Conditions. Mortgage you choose, you will find full details about it in the illustration we send
you and your Loan Offer.
This will be proof of our contract with you. You will also sign a Standard Security
over the Property, which will appear on the public register. Your solicitor will We will give you full details about the interest rates and other special conditions
explain to you what this means before you sign the Standard Security. which apply to your particular Mortgage when we send you your Loan Offer.
We want you to understand what it means to have a Mortgage with us and have Direct Line is a responsible lender and we will only lend you what we believe
made our Conditions as straightforward as possible. If there is something here you can afford to repay, based on the information we have about you and on our
you do not understand, please ask us and we will explain. lending guidelines.
This booklet is only relevant if your Property is in Scotland.
Important Information Whatever the reason, when you take out a Mortgage you agree to make monthly
Because we deal with our customers “at a distance” and not face-to-face, the repayments of the amount you borrow, together with interest and any charges
Financial Services Authority and European law require us to give you the which we tell you about, until everything you owe us has been repaid in full.
following important information:
But a mortgage involves more than just repaying a loan. As you will probably
a Which law applies? borrow a large sum of money over a long period of time, we need some form
Any Mortgage Agreement which you enter into with us will be concluded under of ‘security’, that is a means by which we are assured that we will get our money
Scots law and Scots law will apply to the Mortgage Agreement itself. Any back if you should stop repaying the loan for any reason. That security is the
disputes between us will be subject to the jurisdiction of the Standard Security. By signing the Standard Security you agree that, if you are
Scottish Courts. unable to repay the money you have borrowed from us, and we are unable to
reach a satisfactory arrangement with you, we can sell your house, or whatever
b Which language will we use? title you have to your house, without any further permission from you.
We will at all times communicate with you in English. All contractual
documentation including your Loan Offer, the Conditions and Standard Security So you should be very sure, before you enter into this commitment, that you will
will be supplied to you in English. be able to continue to pay back the money you borrow from us. You should also
consider how the repayments would be made if you should fall ill or die, leaving
c Who regulates us? your family or dependants unable to make the repayments. We do recommend,
Direct Line is a trading name of The Royal Bank of Scotland plc. The Royal Bank therefore, that you consider talking to a financial adviser about life assurance or
of Scotland plc is authorised and regulated by the Financial Services Authority and investment plans before you enter into a Mortgage Agreement with us.
its FSA registration number is 121882. You can check the FSA register on the FSA
website at www.fsa.gov.uk/register/ or by contacting the FSA on 0845 606 1234. Who can apply for a Direct Line Mortgage
To apply for a Mortgage, you must be aged at least 18 years old and able to
repay the mortgage before you retire or reach age 70, whichever occurs first.
What it means to have a Mortgage on your home You must live in England, Scotland or Wales, and have a regular income and a bank
A Mortgage is probably the biggest financial commitment of your life, so it is account from which your monthly repayments will be made by Direct Debit.
important that you understand what it will mean for you and your family before
you enter into this commitment. You must be able to give us a good legal title to the Property. That means you
must own the house at the time you sign the Standard Security.
It is likely you will take out a Direct Line Mortgage for one of three reasons: to
enable you to buy a house, to enable you to borrow extra cash by releasing You must be able to give us a first Standard Security on your Property. That
some of the value or ‘equity’ in your home, or you may already have a mortgage means you cannot have another loan secured on it or if you do, that loan must
with another lender, but want to transfer the mortgage to us. be postponed to our Standard Security. If you are moving your mortgage to us,
we will require proof from your solicitor that you have redeemed or paid off
Introductory Guide 4
your existing mortgage, and that the Property is no longer secured in favour of Can you take your mortgage with you if you move house?
your previous lender. If you have another loan which is secured on your property Your Loan Offer will confirm whether or not your Mortgage is portable,
and you want to keep this loan in place it will need to be postponed to our i.e. whether you can take it with you if you move house.
Standard Security. The other lender will therefore need to formally execute a
Deed of Priority with us. What can you use your Direct Line Mortgage for?
You can apply for a Direct Line Mortgage if you are a first time buyer, if you are
You must use or intend to use at least 40% of the Property as your home. Please moving house, if you want to release some of the value in your home, or if you
also see the Conditions for conditions of the Mortgage which relate to are not moving house, but just want to move your mortgage to us.
occupancy and the use of the Property.
WHAT YOU NEED TO KNOW ABOUT INTEREST RATES
You must also pass our checks (including credit checking, underwriting and We will charge you interest on the outstanding balance of your Mortgage at the
affordability checking) for the Mortgage you are applying for. rate we have set for that type of Mortgage at any given time. When you ask us
about a Mortgage we will tell you the different rates of interest we charge for
How much can you borrow? different types of Mortgages. Our rates can also be found in press and television
You can borrow amounts over £10,000 subject to the value of your property advertisements and on our Internet site www.directline.com
and how much we believe you can afford to repay.
Different Types of Rates
From time to time we will set maximum limits for different types of Mortgages. Where an interest rate is ‘fixed’, it means that we will not change the rate of
The amount that we can lend you as a percentage of the value of your property interest we charge you within the time we have specified, for example, for a
or of the purchase price also depends on the type and amount of Mortgage you period of around three or five years.
wish to take out, the valuation of your property and your personal
circumstances. We do not lend in excess of 95% of the value or purchase price. If your Mortgage has an interest rate(s) which is a ‘variable’ rate, this means that
the rate can go up or down. If the interest rate changes, your monthly payments
If you borrow over 90% of the value of your Property at any time during the will also change. So, when you take out a Mortgage you should consider the
term of your Mortgage, we may charge a higher lending charge, which we will tell effect on your finances if interest rates were to rise.
you about at the time you take out your Mortgage.
If your Mortgage has an interest rate(s) which is a ‘variable’ rate that tracks the Bank
How long can you borrow for? of England repo rate (known as their ‘official rate’ or simply the ‘base rate’), it means
The minimum period for a Direct Line Mortgage is five years or until the end of any that the interest rate will only change if the ‘base rate’ changes. So if the base rate
initial special rate period, if longer. We will also take into account your age when you goes up, your rate will go up and if the base rate goes down, your rate will go down.
take out the Mortgage as well as your own requirements, but the final decision on This type of rate will be a set percentage above or below the base rate or will be
the period of the Mortgage will be ours. It must be possible for you to repay the the same as it – this is the ‘tracker margin’. If you choose a Mortgage with this type of
Mortgage in full by the time you retire or reach age 70 (whichever occurs first). rate your Loan Offer will tell you what the tracker margin for your Mortgage will be.
More than one type of interest rate or more than one tracker margin may apply Because we calculate interest daily, your overpayment once it clears will reduce
at different times during the Mortgage term. the total amount you have to repay straight away.
The ‘APR’ See the Conditions and your Loan Offer for more information, including details
You will see a rate quoted in advertisements, illustrations and offers for of any restrictions on the minimum and maximum amounts which you can
mortgages called the ‘APR’. This stands for Annual Percentage Rate. The APR overpay without any charges applying.
takes into account not only the actual interest rate(s) which you will pay, but also
all other costs associated with the loan, for example application fees or other WHAT OTHER FEES WILL YOU HAVE TO PAY?
fees that are charged over the course of the mortgage loan. There is a legal You will find details of the charges which apply to your specific Mortgage in your
requirement for lenders to show the APR in advertisements, illustrations and Loan Offer. For example, your Loan Offer may contain details of early repayment
offers so that customers can easily make comparisons between loans and charges which apply if you pay all or part of your Mortgage back before the end
mortgages offered by different financial institutions. of the term or during any initial special rate period of the Mortgage.
‘Interest-Only’ and ‘Repayment’ Mortgages Other charges which may be payable are contained in the tariff of charges which
You can choose to repay your Mortgage by repaying both capital and interest we publish. We will give you a copy of our tariff with your Loan Offer.
over the term of the Mortgage (a ‘repayment’ mortgage), so that there remains
nothing to repay at the end of the term, or only to repay the interest over the You should bear in mind that you may also have to pay the following fees to
term of the Mortgage, repaying the capital at the end of the term. other parties:
If you choose the ‘interest-only’ method, it is your responsibility to ensure that House Purchase: Surveyor’s Fees; Legal Fees to your own solicitor; Stamp Duty,
you have a repayment vehicle in place, such as an endowment policy, pension Land Tax and Land Registry fees to your own solicitor.
plan, ISA or other investment plan, the proceeds of which will be sufficient to
repay the capital at the end of the Mortgage term. It will also be your Re-Mortgage: Surveyor’s Fees; (We may pay valuation fees if you complete a
responsibility to ensure that the premiums on the policy are kept up to date. Mortgage with us) Redemption fee, if any, to your current
lender; Stamp Duty, Land Tax, if any; We may pay Solicitor’s fees
You can also choose to have a Mortgage which is part ‘interest-only’ and part if you use the solicitor we nominate. We will tell you more
‘repayment’. about this when you take out your Mortgage.
Making ‘Overpayments’ OBTAINING AGREEMENT IN PRINCIPLE FOR YOUR LOAN
You may, at any time during your Mortgage term, make extra payments over and Before you start house-hunting, or if you are considering re-mortgaging, if you
above the amount of your monthly repayment – we call these overpayments. are happy for us to perform a credit search we can usually tell you in principle
This may help reduce the total interest you have to pay over the lifetime of the how much we would be prepared to lend you, based on the information we
Mortgage. have about your financial circumstances. We can also explain the different types
Introductory Guide 6
of Mortgages we offer and, whichever one you choose, tell you how much your only have one chosen external account at any one time. If you change your
initial monthly repayments would be. chosen external account, you will need to sign a new Direct Debit instruction.
If you are not ready to start the application process, we can simply give you a You may change the date in the month when you will make payments. There may
quote over the phone and provide you with a written illustration. be a charge for doing this.
APPLYING FOR A MORTGAGE FROM DIRECT LINE All payments must be made to your Mortgage Account by monthly Direct Debit
from your chosen external account. So, we will also ask you to agree a variable
Confirming your identity Direct Debit instruction. This instruction authorises us to collect your monthly
All banks are required by law, when opening an account for someone for the first payments from your chosen external account. We cannot release the
time, to confirm the identity of that person. This is to prevent fraud or improper Mortgage funds until the Direct Debit instruction has been set up. As a general
use of the banking system. When you apply for a Direct Line Mortgage, we may rule, it takes ten complete working days to set up a Direct Debit instruction.
ask you to send us certain everyday documents which confirm your identity. If
we cannot confirm your identity in this way, we cannot agree to lend to you. As the Direct Debit is variable, we can continue to collect your monthly
payments even if the amount of that payment changes, for example, due to
How we may use your personal data a change in the interest rate (where the applicable rate is variable). If your
See the Conditions for details of how we may use your personal data. Mortgage interest rate changes, we will tell you before we start to collect the
new repayment amount from your chosen external account what your new
Meeting our lending guidelines monthly repayment will be.
It is not in either your interest or ours that you should borrow more than you
can comfortably afford to repay. So when you apply for a Mortgage, we will help If you wish, the same Direct Debit will also allow you to make permitted lump
you to work out how much you can afford to borrow by taking into account sum overpayments into your Mortgage Account.
things like your current income and commitments, how you have handled your
finances in the past, information from credit reference agencies, your age and the Please read the paragraph headed The Direct Debiting Scheme in the Conditions for
value and current condition of your Property. It is therefore in your interest to an explanation of how the Scheme protects you against loss due to error or fraud.
provide us with information which is as accurate as possible when you are going
through your application. Obtaining a valuation survey on the property
When you apply for a Mortgage, we will arrange a valuation survey for the
Setting up a Direct Debit instruction Property by our valuers, which you agree to pay for if we require you to. The
When you apply for a Mortgage with us, we will ask you to give us details of an type of valuation survey we require may vary and is at our discretion.
account you hold with another bank or building society (your ‘chosen external
account’) to and from which you will make payments to your Mortgage Account. We may offer to pay the cost of the valuation of the property which we require.
You may ask us to change your chosen external account at any time, but you can We will tell you if we will do so when you apply for a Mortgage with us.
A valuation helps us to ensure that the Property is an acceptable security for the Prior to the entry date – or, if you are moving your Mortgage to us, on the remortgage
Mortgage. It does not, for example, cover structural defects or problems of disrepair date – you will also sign the Standard Security, which gives us rights over your
that may exist in the Property, and you should not assume that because a valuation Property and which contains certain obligations which you agree to if you sign it.
survey is acceptable to us for the purpose of a Mortgage, there is nothing wrong
with the Property. In some circumstances we may only need to arrange a type of Your solicitor may give us the deeds and the Standard Security to hold until you
valuation which does not require a valuer to obtain access to your property, such as have paid off the Mortgage.
an external inspection or a simple comparison based on other properties in the area.
Matrimonial homes/occupancy rights of civil partners
Whichever type of valuation we have arranged, if you are concerned about the When you apply for a Mortgage we will ask for your marital/civil partnership
condition of the Property or, indeed, for your own peace of mind, you may want status. That is because we need to know whether someone else, your spouse/civil
to consider obtaining a full structural survey or a homebuyer’s report. partner or former spouse/civil partner, may have an interest in the Property
which may affect our rights. Your solicitor will explain this to you in more detail.
The legal process of buying and mortgaging a property
When you find the house you want to buy, you should have the Property surveyed BOTH OF YOU ARE LIABLE TOGETHER AND AS INDIVIDUALS
then make an offer in writing to the selling agent through your solicitor. The purchase
becomes legally binding when your offer is accepted (known as ‘conclusion of Getting separate legal advice if you are unsure
missives’). You state the entry date, i.e. the date you propose to pay the price If you buy a house in joint names, we will ask you to take out the Mortgage in
and become owner of the Property, in the offer. both your names. When you do so, you agree that both of you are liable together
and as individuals for the whole amount of the Mortgage. In law, this is known as
Your solicitor will ensure that you can obtain a good and marketable title to the ‘joint and several liability’. It means that, if we choose, the law allows us to demand
Property, including carrying out a planning search and searches of various public registers. repayment from both of you together or from only one of you.
Then, all being well and once your solicitor advises us that everything is in order, If we choose, we can obtain repayment of part of the loan from one of you and
we will arrange to pay the Mortgage money to your solicitor in time for completion the rest from the other, or we can decide not to demand payment from one of
on the date of entry. you at all, say if one becomes bankrupt, and to demand repayment of the whole
Mortgage from the other. It is entirely at our discretion to whom we look for
On that date your solicitor will receive, in return for the purchase money, the payment. So, it is important that each of you is very sure when you sign the
keys to the house, the disposition, which transfers ownership of the Property to Mortgage Agreement exactly what your liability is. For this reason we strongly
you, and the Land Certificate, if applicable. Your solicitor will normally complete a recommend that, if you are not sure, each of you should see a separate solicitor
Land Transaction Return for submission to the HM Revenue and Customs, if the who will explain what it means to you.
purchase is liable for Stamp Duty Land Tax, and will arrange to have your name
registered as the owner on the public register.
Introductory Guide 8
PART TWO: DIRECT LINE MORTGAGE CONDITIONS
WARNING OCTOBER 2004 VERSION
This is only a guide. It does not replace or override the Conditions These are the Conditions which form part of your Mortgage
(which you will find in Part 2 of this booklet). You should ensure that Agreement with us. Please read them carefully and keep them for
you read the Conditions as they form part of your Direct Line future reference.
SCHEDULE OF VARIATIONS
We, The Royal Bank of Scotland plc, incorporated under the Companies Acts SECTION A: Introduction and Definitions 9
and having our Registered Office at 36 St Andrew Square, Edinburgh EH2 2YB,
considering that we are about to make advances under the trading name of SECTION B: Here is what you agree to do 10
Direct Line to be secured by standard securities to be given over land and
buildings in Scotland have decided that the standard securities given to us are SECTION C: What we will do/can do as lender 13
governed by the standard conditions specified in Schedule 3 to the Conveyancing
and Feudal Reform (Scotland) Act 1970, as amended by the Redemption of
SECTION D: Things you may do if you wish 15
Standard Securities (Scotland) Act 1971 and by certain variations contained in
our standard securities and also by the following variations, which are referred to
as the Direct Line Mortgage Conditions October 2004 Version and which shall SECTION E: Your information 16
apply only to such advances which are made by us under the trading name of
™Direct Line and shall not apply to any such advances made or to be made by SECTION F: What happens if things go wrong? 17
us in our name or under any other trading name from time to time.
SECTION G: Miscellaneous matters 19
SECTION A: INTRODUCTION AND DEFINITIONS ‘you’ and ‘your’ mean you, the borrower (as named in the Loan Offer) or, if you
borrow together with another person, ‘you’ and ‘your’ mean both of you together
These Conditions apply to all Direct Line Mortgages which we may offer from and separately;
time to time, together referred to as ‘Mortgages’.
‘the Property’ and ‘your Property’ mean the property which is described in the
Your Mortgage Agreement with us is made up of three principal documents: the Standard Security, or any subsequent Standard Security signed by you in favour of us;
Standard Security, the Loan Offer and the Conditions. When we refer to the ‘Loan
Offer’ we mean your initial loan offer and any additional or replacement loan offer ‘Base Rate’ means the Bank of England’s repo rate;
which we have provided you with and you have accepted at anytime.
‘Direct Debit Instruction' means the instruction set up by you, authorising us to
The Mortgage Agreement should be read as follows: collect your Monthly Payments from your chosen external account;
These Conditions contain general conditions which apply to all Mortgages; ‘Interest Rate’ means any rate of interest set out in your Loan Offer, as varied
from time to time (if it is a variable rate) under these Conditions; more than one
Other general conditions are contained in your Standard Security. Interest Rate may apply during your Mortgage Term;
Your Loan Offer may contain additional special conditions which only apply to ‘Monthly Payment’ means the amount of the Mortgage Loan collectible from
your Mortgage Agreement; these special conditions take precedence over all your chosen external account on a monthly basis as notified to you at the
other Conditions. If there is any conflict between the Loan Offer and these beginning of the Mortgage Term and as revised from time to time in accordance
Conditions, the Loan Offer will prevail. with these Conditions;
We also publish a tariff of our charges. ‘Mortgage Account’ means your Mortgage Loan account with us;
Certain rights and duties are incorporated into the Standard Security by an ‘Mortgage Loan’ means all the money you owe us under the Mortgage
Act of Parliament known as the Conveyancing and Feudal Reform (Scotland) Agreement, including the amount set out in your Loan Offer, any subsequent
Act 1970. These rights and duties form part of the Mortgage Agreement. Loan Offers or further advances, together with interest and charges, any unpaid
We are entitled to vary some of these rights and duties and we have done Monthly Payments, and any other amounts which we are entitled to add, or
so in the Mortgage Conditions. which you have specifically agreed that we add, to the amount of your loan;
In these Conditions: ‘Mortgage Term’ means the total period in years and/or months of the Mortgage
‘we’, ‘us’ and ‘our’ mean The Royal Bank of Scotland plc (Registered in Scotland described in the Loan Offer or any revised term which you agree with us;
No. 90312) trading as Direct Line, whose business address is 6 Brindley Place, Tracker Margin’ means the percentage difference between the Interest Rate and
Birmingham B1 2UU, and whose registered office is at: 36 St Andrew Square, the Base Rate where the Interest Rate is a rate which tracks the Base Rate. The
Edinburgh EH2 2YB; margin can be positive, negative or zero. The margin(s) for your Mortgage will be
detailed in your Loan Offer.
The Conditions 10
SECTION B: HERE IS WHAT YOU AGREE TO DO unless we decide to apply the payments in some other order as we think fit.
You will have good title to the property We will credit your Mortgage Account with the amount of your Monthly
You agree that you will have good and marketable title to the Property at the Payment as soon as it reaches that Account. As a general rule, it takes three
time you enter into the Mortgage Agreement. You agree that you will give us a complete working days to transfer funds from your chosen external account to
first Standard Security on the Property, and that you will not grant any other your Mortgage Account. You agree to ensure that there are sufficient funds in
security or charge over the Property that will rank before, equal or subsequent your chosen external account to make each Monthly Payment.
to our Standard Security, without our prior written consent.
We will collect your Monthly Payment on the date in each month stated in your
You will make monthly payments Loan Offer or such other date that we have agreed with you. If that date is not a
You agree to repay the Mortgage Loan to us by Monthly Payments, until you working day, we will collect the payment on the next working day. You can ask to
have repaid in full all the money you owe us under the Mortgage Agreement. change the date of your Monthly Payment, if you wish, and we will try to
accommodate you. We may charge an administration fee for doing this.
The Monthly Payments will be collected from your chosen external account
using your Direct Debit Mandate. You agree to tell us immediately if you change your name, address or your
chosen external account.
If you have an ‘interest only’ Mortgage, or where part of your Mortgage is
‘interest only’, we will use your Monthly Payments to pay off the interest and any If you fail to make a Monthly Payment and we decide to allow you time to pay
charges on your Mortgage. The capital will remain outstanding and you will pay the arrears, we are entitled to continue to charge you interest, at the Interest
this back at the end of the Mortgage Term. Rate applicable at the particular time, on the arrears and on the remaining
outstanding amount of the Mortgage Loan, until the arrears are cleared. We may
Where you have a ‘repayment’ Mortgage, or where part of your Mortgage is also impose a charge each time you miss a Monthly Payment, as detailed in the
‘repayment’, we will notify you from time to time of any changes required to the tariff of charges we publish.
Monthly Payments in order to ensure that your Mortgage Loan, or the ‘repayment’
part of it, is reduced to zero before the end of the Mortgage Term. You will repay the Mortgage Loan
You agree to repay the Mortgage Loan in full by the end of the Mortgage Term.
We will notify you of any adjustment(s) we make to one or more Monthly With a joint Mortgage, each of you is fully responsible for the whole amount of
Payments which is necessary because the period between the completion date of the Mortgage Loan.
your Mortgage (which is the date of drawdown of the Mortgage) and the date
when your first Monthly Payment was due was not an exact calendar month. You will pay interest
You agree to pay interest on the amount we lend you, at the Interest Rate
All Monthly Payments and any other payments we receive will be applied to reduce, applicable at the particular time, and from the date we lend you the money, for
firstly, outstanding charges, secondly, interest and thirdly, capital (where applicable) that particular type of Mortgage Loan.
See Section C: ‘What we will do/can do as lender’ below for the conditions You agree that if, at any time, we believe that no repayment vehicle is in place,
about changes to the Interest Rate. that the premiums you require to pay into the repayment vehicle are not being
kept up to date, or that the repayment vehicle will not be sufficient to repay the
Interest will be calculated on the daily cleared balance on the Mortgage Loan on Mortgage Loan, or the part of the Mortgage Loan which is ‘interest only’, at the
the basis of a 365-day year (both before and after any decree or judgement) and end of the Mortgage Term, we may convert your whole Mortgage Loan to
will be applied monthly. ‘repayment‘ and recalculate your Monthly Payments, so that the Mortgage Loan
will be repaid at the end of the Mortgage Term.
Interest will be charged on interest applied but unpaid.
You will use the property as your home
The interest periods will be approximately monthly, but may not match the You must occupy the Property as your only or main residence, unless we agree
calendar months. otherwise.
You will pay any costs, charges and expenses which apply You may not use the Mortgage Loan for any other purposes. For example, you
to your mortgage will not conduct any business, trade or profession from the Property or take
You are responsible for all costs, charges and expenses incurred by us in paying guests.
connection with the Loan Offer and the Conditions whether or not the
Mortgage Loan is completed, including (but not limited to) valuation fees and You will insure your property
legal costs, provided these costs, charges and expenses are reasonable in amount You agree to insure your Property, and to keep it insured for the duration of the
and we acted reasonably in incurring them. You must pay us our costs, charges Mortgage Term, for its full reinstatement value. The full reinstatement value
and expenses on demand. If you do not, we may add them to the Mortgage includes the cost of clearing the site and architect’s, surveyor’s and legal fees.
Loan and charge interest on them.
You agree to pay the appropriate premium every year and to pay any other sum
For an ‘interest only’ mortgage you will maintain a repayment vehicle which your insurer asks you to, in order to maintain the insurance.
If you have an ‘interest only’ Mortgage, you agree that you will set up and keep in
place a repayment vehicle which will be sufficient to repay the outstanding You agree to insure the Property with an insurer who has all necessary regulatory
balance on your Mortgage Loan at the end of the Mortgage Term. authorisations and who has a place of business in the United Kingdom.
You agree to pay all premiums into the repayment vehicle as they fall due, and to You agree that the insurance on the Property will cover all the major risks which
comply with all the conditions of the repayment vehicle throughout the Mortgage a householder’s insurance policy usually covers, including destruction or damage
Term. You agree not to do anything which could result in your repayment vehicle due to fire, flood, adverse weather conditions, burst pipes, explosion, riot or civil
being terminated prior to its maturity, or which could result in the proceeds of unrest, malicious damage, acts of terrorism, impact by aircraft or vehicle, or by
the repayment vehicle not being used to pay the Mortgage Loan, or the part of animal or falling tree, earthquake, subsidence or landslip, as well as public liability.
the Mortgage Loan which is ‘interest only’, at the end of the Mortgage Term.
The Conditions 12
You agree to add other risks to the policy if we ask you to, as long as our We may accept an insurance policy which covers the whole building of which
request is reasonable. your Property forms part, provided you show us that it complies with all of the
above requirements. In particular, you must show us that your interest and our
You agree, if we request it, to inform your insurer that we have an interest in interest are noted on the policy, and that the manager of the building has agreed
your Property, due to the Mortgage Loan, and to ensure that they note our in writing with you to maintain the insurance policy, and to use any payments
interest on the policy. You agree that you will show us the insurance policy and made by the insurer to repair any damage which is the subject of a claim.
any endorsements noted on it, that you will show us written confirmation that
the premiums are up to date, and written confirmation that our interest is noted If you do not maintain the insurance on your Property, or if you fail to pay any
on the policy, if we ask you to. premium, you agree that we may take out an insurance policy in our name, or
that we may pay the premium in your name, whichever we prefer, and that you
You agree to ensure that the insurance on the Property is index-linked, so that it will reimburse us. You agree to reimburse us immediately if we ask you to, or if
will always cover the full reinstatement value of the Property. You agree to ask we prefer, we may add the premium to the outstanding Mortgage Loan.
your insurer to make the necessary adjustment to the policy in each year of the
Mortgage Term to achieve this. You agree to increase the amount of insurance on Whichever method of repayment we choose, you agree to pay us interest at the
the Property if we ask you to, as long as our request is reasonable. Interest Rate applicable at that time, on the amount in question until it is repaid in full.
You also agree to increase the amount of insurance on the Property if your insurer You will take care of your property
tells you that it is necessary, in order to cover the full reinstatement value of the You agree to do everything necessary to take care of your Property and to ensure
Property. You agree not to do anything or to allow anyone else to do anything that it retains its value, so that the value of our security is not reduced at any time.
which would make the insurance on the Property ineffective, or which would
reduce its value. In particular, you agree that you will:
• keep the Property in good condition, properly repaired and decorated;
If you make an insurance claim and your insurer pays you, you agree that that • comply with the terms of any title conditions, house rules or management
money will be used to repair the damage to your Property, which was the subject committee rules affecting your Property;
of your claim. You also agree that if there is an excess on the insurance policy, or if • pay in good time all rent, rates, taxes or other payments you are obliged to
the amount your insurer pays you is insufficient to repair the damage, that you will make by any law, regulation or private agreement;
pay for the necessary repairs, or pay the difference, from your own resources. • abide by all planning regulations, by-laws and local authority regulations affecting
If you make an insurance claim and your insurer pays you after we have
demanded from you the full outstanding amount of the Mortgage Loan, you
agree to pay that insurance money towards discharging your debt to us.
• tell us if you are served with any notice, order or proposal by a planning or SECTION C: WHAT WE WILL DO/CAN DO AS LENDER
other authority in relation to your Property, and do everything necessary to
comply with the terms of the notice or order; When we will change interest rates
• tell us, and obtain our written consent in advance, if you intend to apply for an If the Interest Rate is a rate which tracks the Base Rate then it will only change if
improvement or other grant in relation to the Property; the Base Rate changes. When a Base Rate change occurs we will change the
• tell us, and obtain our written consent in advance, if you intend to extend or Interest Rate by the same amount as soon as we can and always within 5 days.
make any other structural change to the Property, or if you intend to apply for We will write to you to tell you about this change and to give you advance
planning permission to do so; notice of your new Monthly Payment, in accordance with the Direct Debit
• not transfer the ownership or title of your Property or any part of it to anyone Mandate. The Tracker Margin will not change.
else without obtaining our written consent in advance; if you intend to put your
Property or any part of it up for sale, you will tell us in advance; If the Interest Rate is a fixed rate it will not change during the period for which
• not create or give anyone a lease or tenancy of your Property without the Loan Offer says that it is fixed.
obtaining our written consent in advance;
• tell us if you intend to leave the Property unoccupied for a continuous period We will send you an annual statement
of more than 28 days, or if you yourself are not going to live there for a period We will send you a statement for your Mortgage every year during the Mortgage
of more than 3 months; Term, during the month that the anniversary of completion of your Mortgage
• tell us if you receive a compulsory acquisition notice for your Property or any falls in, or such other time which we tell you about. The statement will include
other kind of notice that might reduce the value of your Property, and take, at information on the payments you have made during the previous statement period.
your expense, any action we ask you to take;
• not do or fail to do anything which might result in your Property becoming We can change the rate which your interest rate tracks
subject to a statutory charge which may be binding on us; If the Interest Rate is a rate which tracks the Base Rate, if at any time and for any
reason the Base Rate ceases to exist in the same form as it did when you took out
You will keep your Direct Debit instruction in place your Mortgage we reserve the right to replace it with another rate, so that the
You agree to keep your chosen external account open and Direct Debit Interest Rate will track the replacement rate. The choice of replacement rate shall
instruction in place for the whole of the Mortgage Term. You may ask us to be at our discretion, however, we will be obliged to act reasonably and, wherever
change your chosen external account, but you may only have one chosen possible, we will replace it with an equivalent rate. If this occurs all references in these
external account at any one time. If we agree to the change, you will set up a Conditions to “Base Rate” will be deemed to be references to the replacement rate.
new Direct Debit instruction, so that your Monthly Payments are maintained.
We can vary our charges
You will give us any information we need Our costs, charges and expenses include not only the money we have to pay to
You will give us any information we request from time to time to enable us other people in connection with the Mortgage Loan but also the administrative
to assess your ability to comply with your obligations to make the Monthly costs we incur when carrying out work or providing a service in connection with
Payments and repay the Mortgage Loan. the Mortgage Loan ourselves. You must pay any charge we make to cover our
The Conditions 14
administrative costs. Any charge we make will be based on our reasonable Whichever method of repayment we choose, you agree to pay us interest, at the
assessment of the cost of doing the work or providing the service in question. Interest Rate applicable at the particular time, on the amount in question until it
This means that we can change the charges and introduce new charges to reflect is repaid in full.
a change in the cost of doing the work or providing the service. A tariff of our
charges and their method of collection will be sent to you with the Loan Offer We can enter and inspect the property and carry out repairs
and the Conditions, and on request. If we change any of our charges, details will You agree that we may visit and inspect your Property, if we ask, so that we can
be sent to you at least 30 days before the change takes effect. satisfy ourselves that it is being kept in a reasonable state of repair, and if we
decide it is necessary, you will allow us to carry out any repair or renewal work,
We can change the terms of the Mortgage Agreement and you agree to pay for that work. We will only ask to visit and inspect your
We may change these Conditions or your Loan Offer for any of the following reasons: Property if we believe that it is not being kept in a reasonable state of repair.
i) to reflect a change in the law, or a decision by a court or ombudsman; We can end this agreement
ii) to reflect a change in any requirements or guidance from the Financial If you breach the Mortgage Agreement we can end the Mortgage Agreement at
Services Authority or any other regulatory authority; any time by giving you notice in writing, and demanding immediate repayment of
iii) to enable us to make reasonable changes to the way we run your account the whole outstanding Mortgage Loan. For more details, please see Section F:
as a result of changes in technology, changes in the banking or financial system, What happens if things go wrong?
or changes in the systems we use;
iv) to provide for the improvement of any services or facilities we offer in In addition, if we are concerned that our rights under the Mortgage Agreement are
connection with your account, or the introduction of any new service or facility; at risk, you agree to take any action we reasonably consider necessary to satisfy
(v) to make these Conditions or your Loan Offer clearer or fairer to you. our concerns. You agree that if you fail to take any such action, we can end this
Mortgage Agreement and demand immediate repayment of the Mortgage Loan.
If we make a change to these Conditions or your Loan Offer, we will notify you
personally of the change not less than 30 days before the change comes into effect. We can decide to waive any of these Conditions for a time
Each time we make a change to these Conditions or your Loan Offer, we will If we choose, we can decide not to enforce any of the terms of the Mortgage
supply you with either a summary of the changes or a copy of the new Conditions Agreement, including your agreement to pay, for a time and then enforce them
or your Loan Offer. again. If we do so, your liability to pay the amount of the Mortgage Loan and
your agreement to abide by the Mortgage Agreement will continue.
We can insure the property if you do not do so
If you do not maintain the insurance on your Property, or if you fail to pay any We can transfer our rights under this agreement to someone else
premium, you agree that we may take out an insurance policy in our name, or We may decide to transfer our rights and duties under this Mortgage Agreement to
that we may pay the premium in your name, whichever we prefer, and that you another financial institution or company and, if we do so, we may pass on your personal
will reimburse us. You agree to reimburse us immediately if we ask you to, or if data to that other party. If we transfer our rights and duties, we will notify you of this.
we prefer, we may add the premium to the outstanding Mortgage Loan. If we transfer our rights and duties, that new party will take our place, and we will have
no further obligations to you under the Mortgage Agreement. discounted rate period. You will find details of any restrictions like these in your
Loan Offer. Any overpayment which you want to make above the maximum
However, you agree that any transfer will not affect your obligations, and you will amount will count as a partial redemption of your mortgage. See below for the
continue to comply with this Mortgage Agreement, and you will make all payments due conditions about partial redemptions.
under the Mortgage Loan to that new party.
You may repay early and redeem the Mortgage
You agree that you cannot transfer your obligations under this Mortgage If you wish, you may repay the Mortgage Loan early and redeem the Mortgage.
Agreement to any other party without our prior written consent. If we transfer our This will usually happen if you decide to sell the Property or move your Mortgage
to another lender, or it may be because you have acquired an inheritance or
rights and duties to another party, references in this Mortgage Agreement to ‘we’, ‘us’
windfall or you are in a position to repay your borrowing. You should phone and
and ‘our’ will mean that party.
tell us if you wish to do so, or if you just want to know how much it will cost to
repay the Mortgage Loan in full.
We may introduce new offers for new customers
We will then calculate the amount you still owe us, which will be the outstanding
We may offer discounted, special or lower interest rates to new customers, for
amount of the Mortgage Loan, together with applicable costs and charges, which
which you will not be eligible.
we will explain to you when you ask us for a redemption figure.
SECTION D: THINGS YOU MAY DO IF YOU WISH
Depending on the type of Mortgage you have, the cost of redemption may
include extra charges such as early repayment charges, which we will tell you
You may make overpayments
about when you take out the Mortgage Loan. You will find details in your Loan
You may make overpayments, which are extra payments over and above the
Offer and/or in our tariff of charges.
amount of your Monthly Payment throughout the Mortgage Term. You may do this
usually by phoning and asking us to collect the overpayment as a lump sum
You may repay part of the Mortgage early and redeem that part
payment by means of your Direct Debit Mandate on your next payment date.
If you wish, you may repay part of the Mortgage Loan early and redeem this
If your Mortgage Agreement is in joint names we will accept instructions from
part. This is what we call a partial redemption.
either of you without asking for the other person’s consent.
The minimum amount of any partial redemption is £500.
If you do make an overpayment(s), you must continue to make your Monthly
Payments as usual.
Depending on the type of Mortgage you have, early repayment charges and
other charges may apply to any partial redemption. We will tell you about any
The minimum amount of any overpayment is £200.
such charges when you take out the Mortgage Loan. You will also find details in
your Loan Offer and/or in our tariff of charges.
There may be restrictions on the maximum amounts which you can overpay
during all or part of your Mortgage Term, for example, during any fixed or
The Conditions 16
Partial redemptions can usually be made by phoning us and asking us to collect the SECTION E: YOUR INFORMATION
amount you wish to repay by Direct Debit from your chosen external account on
Who we are
your next usual payment date. If your Mortgage Agreement is in joint names we will
Your account is with The Royal Bank of Scotland trading as Direct Line.
accept instructions from either of you without asking for the other person’s consent.
We are a member of The Royal Bank of Scotland Group (the Group).
For information about our group of companies please visit www.rbs.com and
click on ‘About Us’, or for similar enquiries please telephone 0131 556 8555
or Minicom 0845 900 5960.
How we use your information and who we share it with
Your information comprises all the details we hold about you and your
transactions, and includes information obtained from third parties.
We may use and share your information with other members of the Group to
help us and them:
• assess financial and insurance risks;
• recover debt;
• prevent and detect crime;
• understand our customers’ requirements;
• develop and test products and services.
We do not disclose your information to anyone outside the Group except:
• where we have your permission; or
• where we are required or permitted to do so by law; or
• to credit reference and fraud prevention agencies and other companies that
provide a service to us or you; or
• where we may transfer rights and obligations under this agreement.
We may transfer your information to other countries on the basis that anyone to
whom we pass it provides an adequate level of protection. However, such
information may be accessed by law enforcement agencies and other authorities
to prevent and detect crime and comply with legal obligations.
From time to time we may change the way we use your information. Where we We can provide the names and addresses of the credit reference and fraud
believe you may not reasonably expect such a change we shall write to you. If prevention agencies we use if you would like a copy of your information held
you do not object to the change within 60 days, you consent to that change. by them. Please contact Documentation Advisory & Compliance Team,
The Royal Bank of Scotland Plc, Mortgage Centre, PO Box 123,
If you would like a copy of the information we hold about you, please write to: Greenock PA15 1EF. The agencies may charge a fee.
The Data Protection Manager, Regulatory Risk, 2nd Floor, Business House B,
RBS Gogarburn, PO Box 1000, Edinburgh EH12 1HQ. A fee may be payable. SECTION F: WHAT HAPPENS IF THINGS GO WRONG?
Credit reference agencies If you have payment difficulties/get into arrears
We may make periodic searches at credit reference agencies and will provide If, at some time during the course of your Mortgage Term, you know you are
information to the Group to manage and take decisions about your accounts. going to have difficulty in complying with any of the conditions of the Mortgage
This may include information about how you manage your account including Agreement, for example, in making your Monthly Payments, you should phone and
your account balance, credit limit and any arrears. We will also provide this tell us. We will use reasonable efforts to come to some arrangement with you.
information to credit reference agencies who may make this information available
to other organisations so that they can take decisions about you, your associates If you have failed to pay any two Monthly Payments (these do not have to be
and members of your household. The information may also be used for tracing consecutive), we have not been able to come to an appropriate agreement with
purposes. you and the arrears remain outstanding, we may take whatever action the Mortgage
Agreement, applicable regulatory rules and/or the law allows us to recover the
Fraud prevention agencies money you owe us. This includes taking possession of and selling your Property.
If false or inaccurate information is provided and fraud is identified or suspected,
details may be passed to fraud prevention agencies. If you default
Law enforcement agencies may access and use this information. If you (or either of you if it is a joint loan):
We and other organisations may also access and use this information to prevent • break this Mortgage Agreement or any term or condition of it; or
fraud and money laundering, for example when: • fail to pay any two Monthly Payments (these do not have to be consecutive) as
• checking applications for, and managing credit or other facilities and recovering they become due; or
debt; • fail to pay any other amount due to us under this Mortgage Agreement within
• checking insurance proposals and claims; two months after you should have paid it; or
• checking details of job applicants and employees. • do not keep to any of your obligations under the Mortgage Agreement (which
is not an obligation to pay money); or
We, and other organisations that may access and use information recorded by • give false information, or fail to give all the information we have asked you for,
fraud prevention agencies, may do so from other countries. in connection with this Mortgage Agreement; or
• fail to pay the full outstanding amount due under the Mortgage Loan, when
you are required to under the Mortgage Agreement; or
The Conditions 18
• become unable to pay your debts, or enter into a voluntary arrangement with any time after the date of demand we may also:
your creditors, or you are sequestrated or a trustee in bankruptcy is appointed • insure the Property in our name, and
over your assets or a decree is obtained against you and is unsatisfied for 14 • develop the Property or apply for planning permission to do so, and
days; or • enter into any agreement in relation to the Property as we see fit to do.
• become mentally ill or incapable of managing your affairs; or
• use the Mortgage Loan for fraudulent or illegal purposes or we become You agree that we may do any of these things on your behalf and at your
concerned that this is the case; or expense. You agree that we may apply to the Sheriff Court for a warrant of
• become convicted of a serious criminal offence; or summary ejection. We will only do this if we have given you at least seven days'
• if your Property or any part of it is compulsorily purchased or acquired; or notice to leave the Property. You agree that if we give you this notice, you will
• your Property is abandoned; or not object to us applying for a warrant.
• your Property is destroyed or materially damaged and we do not reach
agreement with you regarding its reinstatement; or You agree that, if the sale price we obtain for the Property is not sufficient to pay
• another lender takes possession of the Property, appoints a receiver in respect off the Mortgage Loan and the outstanding interest, charges, and the costs we incur
of the Property or exercises (or tries to exercise) a power of sale over the in doing any of the above including, for example, estate agents' and legal fees, that
Property; or you will pay us the balance on demand. You further agree that if you do not pay us
• the security created by the Standard Security becomes invalid or unenforceable; or the balance on demand, interest will continue to run on the outstanding amount
• die you owe us at the Interest Rate applicable at the time, until you have paid us
everything you owe us in full.
we may terminate the Mortgage Agreement immediately by sending you or your
representatives a notice saying so. You agree that, in any of these circumstances, if If the sale price is more than sufficient to pay off the Mortgage Loan and other
we terminate the Mortgage Agreement you or your representatives will pay us outstanding amounts then we will inform you of the amount left over and will
the outstanding Mortgage Loan in full and on demand, including interest and pay this to anybody who has a mortgage or charge over your Property and, if
charges, which you agree we will continue to charge every day that you are in there is none, to you.
default. You also agree to pay us any charges and legal costs we incur in
attempting to recover the monies due. You agree that you will pay us that If we, or anyone we ask to do so, enters or occupies the Property while
interest and those charges at our current rates, as advertised or notified to you exercising our powers under the Mortgage Agreement or in law, you agree that
from time to time; until you have paid in full everything that you owe us. we will not be liable to you or to any third party, that is someone other than you
or us, for any loss, damage or injury that occurs.
We may take possession of your property and sell it
If you default, as described above, and we demand that you pay us in full the Death of a Mortgage account holder
whole outstanding balance of the Mortgage Loan and you fail to do so, we may If you die during the Mortgage Term, liability to repay the Mortgage Loan will
exercise our powers under the law and the Mortgage Agreement including our pass either to the other joint borrower or, if the Mortgage Agreement is in your
power to sell the Property in order to repay the amounts you owe to us and, at sole name, to the executors or administrators of your estate.
We strongly recommend that you (or, with a joint Mortgage, both of you) take Governing Law
out and maintain life insurance for the amount of your borrowing throughout the The Law that applies to this Mortgage Agreement is the Law of Scotland, and, if
Mortgage Term. For the insurance money to be available on your death to meet your we choose, any proceedings which may arise out of our contract with you will
debts, including repaying your borrowing with interest and charges, you should not take place in a Scottish Court.
deal with the policy(ies) in any way, e.g. disposal by gift or trust, assignment or
charge to anyone else, that would mean that the monies are not paid to your estate. Notices and Statements
When we send you statements, notices or other correspondence we will send
SECTION G: MISCELLANEOUS MATTERS them to you (with a joint Mortgage, to both of you) at the Property or at any
Signing of further documents other address of which you have given us notice. Notices and correspondence
from us will be effective two days after we have posted them, or if we arrange
If, at any time during the Mortgage Term, we ask you to sign any further documents for them to be delivered by hand, when delivered.
to perfect or protect our rights under the Mortgage Agreement, you agree that
you will sign them, as long as our request is reasonable. Complaints
If you have a complaint about any aspect of our products or service, please tell
Power of attorney
us. You can do this by phone or in writing. We will do all we can to ensure that it
You agree that, at any time during the Mortgage Term, we may act as your
is resolved quickly and fairly. If you would like further details of our internal
attorney, that is someone who is entitled to do any thing or sign any document
complaints procedure, please ask us and we will send you a leaflet which gives a
in your name which we believe is necessary, in order to protect our security
step-by-step guide to what you should do.
under the Mortgage Loan.
Other powers The Financial Ombudsman Service
Our rights and powers under this Mortgage Agreement are in addition to any We will try to resolve any complaint in a reasonable and professional way.
rights and powers which we may have at law. However, if you are still not satisfied with our handling of the matter, you can
refer the complaint to the Financial Ombudsman at the following address:
Events beyond our control The Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR
We will make all reasonable efforts to provide a complete mortgage service at Enquiries: 0845 080 1800
all times. However, we will not be liable to you for any loss if we cannot provide Switchboard: 020 7964 1000
the service due to events which are beyond our control, for example, failure of Email: email@example.com
equipment or power supplies, industrial action, or natural disaster. We will send you further details of the Financial Ombudsman Service if you ask us to.
When we refer to a working day we mean every day except Saturday, Sunday
and English Bank Holidays. If the day you give us your instructions is not a
working day, we will carry out your instructions on the next working day.
The Conditions 20
The Direct Debiting Scheme
The payment scheme we use is based on a Direct Debit instruction agreed by
you giving us authority to collect variable or different amounts at different times
from your chosen external account. We will use your Direct Debit instruction to
transfer funds into your Mortgage Account to make your Monthly Payments.
Under the Scheme you are protected against payments being made by mistake,
error or fraud by us or by your external bank or building society, by means of
indemnities. This means that we must only act on your specific instructions and
if any payment is made in error, you will be reimbursed by us or by your bank
or building society.
The Conditions 22
For further information call our Mortgage Helpline:
0845 300 1400
Minicom: 0800 056 5762
The maximum call charge from a BT landline is 8p plus up to 6p per minute. Calls from other networks may vary. Calls may be recorded.
visit us on-line at: www.directline.com
CUSTOMERS WITH SPECIAL REQUIREMENTS
Direct Line has a variety of facilities in place so that as many customers as possible can
use our services. Direct Line supports the Typetalk service for people with specific
communication requirements. To use Typetalk, please prefix the number 18001
before the number you wish to dial. For example: 18001 + [area code] + [number].
Alternatively, Direct Line will deal with anyone who has Power of Attorney for you,
should you be unable to contact us yourself. Direct Line shall also be happy to send
you this booklet and any of our other brochures, letters or statements in Braille,
large print or audio, upon request.
Direct Line is a trading name of The Royal Bank of Scotland plc.
Authorised and regulated by the Financial Services Authority.
Direct Line, the Red Telephone on Wheels and the Red Mouse on Wheels are trade marks of Direct Line Insurance plc,
used under licence to The Royal Bank of Scotland plc.