Mortgage guide by liaoqinmei


									Mortgage guide
Your mortgage made simple
Mortgage guide

Contents                                                       Page
What you can expect from this booklet                             2
Obtaining a mortgage loan from us                                 2
Level of service under The Mortgage Code                          3
Where you have used the services of an Intermediary               3
Our terms of lending                                              3
Buy-to-Let mortgages                                              4
Getting legal advice                                              4
Express completion service                                        4
Assessing applications for credit                                 5
How does credit scoring work?                                     5
What types of information do credit reference agencies hold?      5
Is credit scoring fair?                                           5
What happens if your application is declined?                     6
The mortgage contract                                             6
Portability                                                       6
Transfer of your mortgage loan                                    7
Higher Lending Charge                                             7
Interest rates                                                    7
Affordability – You and your mortgage                             7
Consolidation                                                     7
Guarantors                                                        8
Making your mortgage payments                                     8
Methods of repaying your mortgage                                 9
Making a lump sum payment                                         9
Repaying your mortgage early                                      9
Insuring your home or property                                   10
Life Assurance                                                   10
Financial difficulties                                           10
Complaints                                                       10
Your questions answered                                           11
Glossary                                                       12-16


Mortgage guide
What you can expect from this booklet                        broker, a financial adviser or other intermediary (we will
                                                             refer to any such person or company as an
As a mortgage lender, we take our responsibilities for       “intermediary” below). Our policy is to only accept loan
both potential and existing mortgage customers very          introductions from intermediaries who are licensed
seriously. We subscribe to the principles of both the        under the Consumer Credit Act 1974 and who also
Council of Mortgage Lender’s Code of Mortgage Lending        subscribe to The Mortgage Code and the OFT guidelines.
Practice (“The Mortgage Code”) (copy available on            Any intermediary wishing to introduce business to us is
request) and also the guidelines set out by the Office of    required to sign a document to that effect. There are
Fair Trading (“OFT”). You should be aware, however, that     some additional important areas, which you should be
any loan which you may obtain from us does not fall          aware of:
within the Consumer Credit Act 1974 and, as such, will
not be regulated, unless otherwise advised.                  •   We have no control over the fees or charges that an
                                                                 intermediary may make and you should obtain the
The purpose of this booklet is to provide you with               details of these direct from the intermediary.
information on how we conduct our mortgage business,
our commitment to you as a lender and the                    •   We may pay a fee or commission to the intermediary
responsibilities that you will have to us when taking out        for introducing the mortgage to us and they will be
a loan. It also provides you with some answers to                responsible for making you aware of this. Where your
questions often asked in relation to taking out a loan           intermediary introduces the mortgage to us via a
and a glossary of the terms which you may not be                 packager, that is, a third party who collates some of
familiar with.                                                   the necessary information before submitting the
                                                                 documentation to us, we may not always be aware of
Accompanying this booklet you will find a current list of        the fee paid to your intermediary. The intermediary
fees (“Tariff of Charges”) which you may be charged at           should tell you the amount of any fee that they
any time during the term of your loan with us. For               receive on request, however, we will seek to confirm
example, each year we will provide you, without charge,          the amount to you.
with a statement of the transactions made to your
mortgage account. However, if at some other time             •   The full terms and conditions of the loan will be set
during the year you require a revised copy, we will make         out in your contract documentation. No intermediary
a nominal charge for the administration involved in              has any authority to make promises to you on our
issuing this to you. There may be other fees charged             behalf or to vary or add to the terms on which we
from time to time which are in the Tariff of Charges, e.g.       may be prepared to make a loan available to you. If
solicitors fees and further advance fees which will be           any intermediary makes such a suggestion, you
charged to your account and you will be advised when             should tell us immediately. You should not sign any of
such fees are incurred.                                          our documents if you have been led to believe that
                                                                 they mean something other than what they actually
If you decide to apply for a loan with us, it is important       say.
that you read and understand the contents of this
booklet before your application is sent to us. You should    •   You are able to withdraw from the mortgage offer at
also ensure that you keep this booklet in a safe place for       any time, and without any obligation to us, up until
future reference. If you have any questions regarding this       the day of legal completion. However, when a valuer
booklet or your loan, you should speak either to your            has already carried out a valuation of the property
mortgage broker or directly with our call centre staff.          that was to be mortgaged, then the fee charged for
                                                                 this will not be refundable. If your application has
                                                                 been referred to us by an intermediary, you should
Obtaining a mortgage loan from us                                check with your intermediary regarding any financial
                                                                 commitments to him/her which you may be obliged
Most of our loans are introduced to us by a mortgage             to pay.

Level of service under The Mortgage Code                      •   Your intermediary should satisfy itself that you can
                                                                  repay the amount of the loan which you are applying
The Code sets minimum standards of good lending and
                                                                  for and not encourage you to take out a loan for more
advisory practice, which are to be followed by all lenders
                                                                  than you are able to afford. If you do not keep up
and mortgage intermediaries who subscribe to the
                                                                  repayments on the loan, you may risk losing your
Code. Under the terms of the Code there are three levels
of service available. These are:
                                                              •   Your intermediary should help you complete our
a) Full advice and recommendation;
                                                                  application form accurately and not encourage you to
b) Information on a range of products so that you can             mis-state your income, resources or outgoings in any
    make an informed choice;                                      way. All sections of the application form should be
                                                                  completed by you, except where stated otherwise; you
c) Information on a single product only.
                                                                  should never be asked to sign a blank form for
We provide level (b), that is information on a range of           completion at a later date. However, if the
products so that you can make an informed choice and              intermediary completes the application form on your
service level (c), information on a single product only,          behalf, you should check all information carefully
where you have already decided or where your mortgage             before signing it.
loan has been introduced by an intermediary.
                                                              •   If your intermediary is entitled to receive any fees or
                                                                  commission from us, the amount of this should be
                                                                  disclosed to you. Similarly, if they have received any
Where you have used the services of an
                                                                  financial support from us to help with either their
Intermediary                                                      marketing or advertising, they should also disclose
Under The Mortgage Code and the OFT guidelines, an                this sum to you.
intermediary also has responsibility to you as his/her        •   They should also disclose any other significant
client. You can request full details of the relevant              business connection there might be between them
guidelines from your intermediary, however, we have               and us.
listed below some of the more important ones:
                                                              •   You should be aware that the intermediary may not
•   Your intermediary is obliged to disclose any fees,            be in a position to give you entirely independent
    which you might be liable to pay to them for their            advice, e.g. the intermediary may only deal with a
    services. Any fees that you pay will not be a condition       limited panel of lenders rather than the market as a
    of us providing you with a loan;                              whole. If you have any doubts you should inquire as to
•   An intermediary should act in a fair, honest and              the position of the intermediary.
    truthful manner and not mislead you in any way;           If at any time during your dealings with your
•   An intermediary should not use any unfair or high-        intermediary you feel that you have been treated
    pressured selling techniques, such as coming to your      unfairly or that the intermediary has not complied with
    home uninvited, or at unsociable hours, i.e. outside      his obligations to you, you should, in the first instance,
    the hours of 9 a.m. to 9 p.m. Monday to Friday, or        contact your intermediary or make us aware of this so
    rushing you to make a decision.                           that we may request that they conduct an investigation
                                                              into your concerns.
•   A copy of this booklet should have been provided to
    you by the intermediary at the outset and you should
    have been given enough time to read and consider          Our terms of lending
    the contents before you sign any application to enter
    into a loan agreement with us. You should ensure that     Our loans are available on UK residential properties:
    you are fully aware and understand the contents of        perhaps you are looking to purchase a new home or
    this booklet. If you require any guidance please ask      would like to arrange a remortgage of your existing
    your intermediary who will be able to help you.           property.

If you currently rent, or have bought, a house from the      Full details of these and the Buy-to-Let schemes
council or from a non-charitable housing trust or            themselves will be provided to you by your intermediary.
association, we may also be able to assist you with a
loan (flats and maisonettes are not eligible). As an
approved lender under the Housing Act, we are able to        Getting legal advice
offer loans to either help you purchase your home under
                                                             Before taking your loan out with us, we recommend you
the Housing Act 1980 Right to Buy scheme or
                                                             take legal advice from a solicitor about the terms and
remortgage your existing loan. To find out exactly what
                                                             conditions applicable to your mortgage.
you are entitled to, you should contact your local
authority who will be able to provide you with the           This booklet is not intended to replace any legal advice
relevant information and guidance.                           you seek. Neither should any loan that we may make
                                                             available to you be taken as a recommendation by us to
Our loans are available to both employed and self-
                                                             purchase a particular property, or as confirmation that
employed applicants and your intermediary will be able
                                                             we believe it is worth what you are paying for it. Under
to provide you with full details of the schemes we can
                                                             the terms of the loan application, you are required to
offer. All loans are subject to status and security. This
                                                             engage a solicitor to carry out all the legal requirements
means that we will not provide loan finance to anyone
                                                             in relation to your mortgage. We are happy for you to
under the age of 18 (or 25 for our Buy-to-Let products)
                                                             use our solicitor or you may appoint your own to act for
and we will only lend money on the security of a
                                                             you. If you instruct a conveyancer or solicitor who does
property, for which we will need to verify the value by
                                                             not meet our panel requirements, we will not instruct
having a property valuation carried out by a qualified
                                                             him/her to act on our behalf. All costs, including our
valuer. A fee will be charged for this valuation and you
                                                             solicitors costs, are to be met by you.
can find details of this in the Tariff of Charges.

                                                             Express completion service
Buy-to-Let mortgages
                                                             If you are simply taking out a new loan on your existing
The Buy-to-Let products have been designed specifically
                                                             property, for certain products we are able to offer our
for individuals who are looking to purchase one or a
                                                             Express Completion Service aimed at people who want
number of UK residential properties to let. Whether it be
                                                             to reduce the time that it usually takes to remortgage.
for individual tenants (other than yourself, friends or
relatives, diplomats and multiple tenants) or for            With this service, you do not need to appoint a solicitor,
companies with relocation or expatriate letting              unless you prefer to do so. As most of the checks
requirements, our aim is to provide you with the right       regarding the Title of your property were carried out by a
loan to suit your needs.                                     solicitor when you bought it, lesser investigations only
                                                             are required and these will be done solely for our
Unlike some lenders, we make a decision to lend based
                                                             purposes so that we can issue a mortgage offer.
on the security that the properties provide from the
rental income, rather than limiting it to the individual’s   •   5-day turnaround
personal circumstances. Whether you are purchasing a
                                                             We will send your Mortgage Offer to you, and your
property to let or you already have a property but you’d
                                                             mortgage documents will be sent under separate cover.
like to remortgage, our loans are made on properties
                                                             These will all need to be signed by you and returned.
which are let for residential purposes on an Assured
                                                             Once they (and any other relevant documents from your
Shorthold Tenancy agreement (which complies with the
                                                             intermediary) have been received, we can usually
Housing Act 1996) where the rental income, on an
                                                             guarantee that your loan will complete within 5 working
unfurnished basis, is sufficient to service the monthly
mortgage payments.
                                                             N.B. If the land is unregistered, due to more complex
Because our Buy-to-Let mortgages are based on the
                                                             investigations being required, or where you require a
rental income generated by the property, there are some
                                                             transfer of equity, completion is unlikely to take place
limitations as to the type of property we will lend on.

within 5 days. The Express Completion Service is               When the score reaches a certain level then we will
unavailable on Right to Buy mortgages. If you would like       generally agree to your application. If the score does not
to take advantage of this service, the fee is listed in the    reach this level, it may not be possible to make a loan
Tariff of Charges.                                             offer. This does not bear any reflection on an applicant's
                                                               ability to pay, it simply means that based on the
                                                               information available to us, we are not able to take the
Assessing applications for credit                              risk of granting that loan.

As a responsible lender, we believe it is important for you    Lenders are not obliged to accept an application, neither
that we take into account your personal circumstances          do all lenders have the same lending policies and scoring
to establish the appropriate loan amount to offer to you.      systems, so applications to other lenders may be
To help us to do this, applications may be assessed using      assessed differently. This means that one lender may
a process called credit scoring.                               accept your application but another may not.

Responsible lending is essential for the good of both          Sometimes scores are calculated by credit reference
applicants and lenders. The Office of Fair Trading             agencies and we may also use these in our assessment.
regulates the provisions of credit and considers credit        Additionally, we may have policy rules to determine
scoring to be an aid to responsible lending.                   whether we will lend. These reflect our commercial
                                                               experience and requirements.

How does credit scoring work?
                                                               What types of information do credit
Every loan that a lender makes involves a certain level of
repayment risk, no matter how reliable or responsible
                                                               reference agencies hold?
an applicant is. Credit scoring enables lenders to             Credit reference agencies hold different types of
calculate the level of risk for each applicant based on        information, and some will apply to your application. For
the information obtained. It produces consistent               instance, they hold details of who is on the electoral roll,
decisions and is designed to ensure all applicants are         county court judgements, bankruptcies, credit account
treated fairly.                                                performances and the number of credit inquiries that
Credit scoring takes into account information provided         have been made. Applicants with county court
directly by you in your application form, any information      judgements may find this impacts on their ability to
we may already hold about you, and any information we          obtain credit.
may obtain from other organisations. We will always            A copy of information held about you at a credit reference
obtain your consent either verbally or in writing to use       agency is available to you by writing to one or both of the
any information that you have provided to us. Where we         following addresses, enclosing a £2.00 fee. We will tell
use information from other organisations, we will always       you the credit reference agency/agencies used.
tell you who they are. We may also use information
obtained from credit reference agencies.                       Experian
                                                               Consumer Help Service, PO Box 8000, Nottingham,
The credit scoring system is based on thorough analysis        NG1 5GX, UK.
of large numbers of repayment histories over many
years of providing credit. This statistical analysis enables   Equifax
us to identify characteristics that predict a likelihood of    Dept 1E, PO Box 3001, Glasgow, G81 2DT.
future performance.

Credit scoring assesses each piece of relevant                 Is credit scoring fair?
information and points are allocated to produce a score.
For example: if individuals falling within a particular age    We believe that credit scoring is fair and impartial. It

group have proved to be more likely to meet payments           does not single out a specific piece of information as the

than those falling within another age group, the points        reason for declining an application. We test our credit

allocated will reflect this.                                   scoring methods regularly to make sure they continue to
                                                               be fair and unbiased.

What happens if your application is                           The offer documentation comprises:

declined?                                                       a) The Mortgage Offer;

If we are unable to accept your application, we will tell       b) The Special Conditions (included within the
you. We will also tell you the principal reason why we                Mortgage Offer);
were unable to agree your request. If you did not pass
our credit score we will advise you accordingly and give        c) The Standard Offer Conditions.
you an indication of the type of information that was         You will need to sign a Deed of Mortgage which
included in the scorecard. Generally, this information will
                                                              incorporates the Mortgage Conditions. This deed
be grouped into categories such as how long you have
                                                              acknowledges receipt of the loan and offers the property
lived at your address, your credit history and your ability
                                                              as security for the loan by way of legal mortgage on the
to repay.
                                                              terms set out in the above documents.
If your application is declined, this will not be disclosed
                                                              If there is any inconsistency between the terms and
to the credit reference agencies.
                                                              conditions in any of the offer documentation and the
If we have declined your application there may be             Mortgage Conditions, the offer documentation will
circumstances which will enable us to reconsider our          prevail and the following order of priority will apply:
decision. We will generally ask you to provide us with
additional information in order that we may consider          1) Special Conditions;
the matter further.                                           2) Mortgage Offer;
If you wish to ask us to reconsider our decision then
                                                              3) Standard Offer Conditions;
please contact the Appeal Officer, New Business
Department, PO Box 3555, GMAC Residential Funding,            4) Mortgage Conditions.
Eastern Gate, Brants Bridge, Bracknell, RG12 9UP.
                                                              You must ensure that you have read and fully
                                                              understood these documents before you sign the
The mortgage contract                                         Mortgage Offer agreeing to proceed with the mortgage
Under the terms of The Mortgage Code, we will provide
you with details of the product you have selected.            You may also receive other documents in relation to your
                                                              mortgage loan, via your solicitor, which again must be
If we decide to offer you mortgage loan facilities, the
                                                              fully read and understood before you sign them.
terms and conditions relating to the money you borrow
from us will be set out in the offer documentation and
the Mortgage Conditions. The offer documentation will
contain the financial aspects of your loan including the
rate of interest to be charged, the monthly mortgage          If you have an existing mortgage with
payment (including the monthly premium for any                GMAC Residential Funding and are thinking about
insurance policies you may have taken out with us), the       moving home or remortgaging, you may be able to
property to be mortgaged to us as security for                transfer the mortgage product to the whole of your new
repayment of the borrowing and any requirements we            mortgage, without incurring any early repayment charge,
specify which have to be satisfied before we can release      subject to certain criteria. This is known as
the loan.                                                     portability/porting/ported. This option is only available
                                                              on some products, so you will need to check the terms
The terms and conditions in the offer supplement the
                                                              and conditions of your loan, prior to making a new
Mortgage Conditions that will apply to your mortgage
                                                              mortgage application.
(in Scotland, your standard security) when your loan is
completed.                                                    You will also need to repay your existing mortgage at
                                                              the same time as your new mortgage is taken out with
The offer documentation and the Mortgage Conditions
are important documents and you should read them              us. Other terms and conditions will apply and these will
very carefully. You should ask a solicitor to explain them    be detailed on your mortgage offer and in the mortgage
for you if you do not understand what they mean.              conditions booklet.

Transfer of your mortgage loan                                 increase in your monthly payment once the benefit of
                                                               the special product has ended. You should ensure that
From time to time, we may decide, at our discretion, to        you will be able to afford such an increase. Likewise, in a
transfer or assign all or part of any mortgage to any          period of rising interest rates, your payments may
other person or company. In the event that this does           increase, depending on the product chosen.
occur, the mortgage contract will remain in force and          Typical example: Based on a residential, interest only,
you will be liable under it as you would have been with        loan of £75,295 (initial loan of £75,000 with a £295
us. In such circumstances, all rights to exercise the          Arrangement fee added) on a property valued at
original terms and conditions of the contract will be held     £100,000 repayable at the end of a 25 year loan term:
by the other person or company to which it has been            included in the calculation of the total amount payable
transferred or assigned. You need to be aware of this, as      and APR are: Arrangement fee of £295, Telegraphic
the declaration you will sign on the application form          Transfer fee of £30, Non Block Buildings & Contents
contains this clause and by signing the declaration, you       Insurance fee of £40, Valuation fee of £240, assumed
will have given your consent to this.                          Legal fees of £350, Redemption Administration Fee of
                                                               £115 and Deeds Production Fee of £40 payable at the end
Higher Lending Charge                                          of the 25 year loan term for the release of the security
                                                               over the property; 300 gross monthly interest payments
If your loan represents a high percentage of the price or      of £442.60: Total amount payable £183,905.00. The
valuation of the property (usually in excess of 75%), you      overall cost for comparison is: APR=9.8% assuming that
may have to pay a Higher Lending Charge. The fee is            the 3 month LIBOR remains at 6% throughout the 25
calculated as a percentage of the upper portion of the         year loan term. For each 1% change in the charging rate,
loan. The Higher Lending Charge is sometimes known as          the gross monthly payment would change by £41.91.
Mortgage Indemnity Guarantee (MIG), Mortgage Risk
Payment, Additional Security Protection, Excess Advance        Affordability – You and your mortgage
Fee, Higher Percentage Advance Fee or High Loan to
Value Fee. This fee may be used at our absolute                If you decide to take a mortgage with us, we want you to
discretion, to purchase insurance cover.                       be sure that you are able to meet your loan payments as
                                                               well as any other financial commitments that you might
Where we obtain this insurance cover, such insurance is        have. You need to take time to think carefully about this
for our sole benefit. It does not cover you and will not       as you need to be aware that, as well as repaying the
protect you if your property is subsequently taken into        actual loan amount, you should ensure that you are able
possession and sold for less than the amount you owe:          to meet any other monthly commitments you may have.
you will remain liable to pay all sums owing, including        You should not enter into the mortgage or any other
arrears interest and legal fees. Interest will continue to     financial obligations if by doing so it will be difficult for
accrue until the mortgage is repaid in full. If a claim is     you to meet the required monthly payments as well as
paid to us under such insurance, the insurers generally        maintaining your normal monthly outgoings. You should
have the right to recover this amount from you.                be particularly aware that YOUR HOME IS AT RISK IF YOU
                                                               DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR
Interest rates                                                 OTHER LOAN SECURED ON IT.

The interest rate to be charged on your mortgage loan
and the product type will be set out in your mortgage          Consolidation
offer. We offer various products from time to time such        This is a method of replacing your existing financial
as capped rates, discounted rates, fixed rates, LIBOR rates,   commitments with one loan that is secured on your
cashback and standard variable rates. These terms are          property by way of a first legal charge, i.e. a mortgage.
defined in the glossary.                                       This loan is used to pay off your existing financial
You should be aware that where you select a discounted,        commitments.
capped or fixed rate product, there may be a substantial

You should be aware that this method entails replacing      society account. This will ensure that your payments are
your secured and/or unsecured financial commitments         automatically made on the payment due date and that
with a loan secured on your home. This will mean that       any changes in your payments which might occur, for
you may make a short term saving but that you may pay       example due to a rate change, are made without you
more over a longer period of time than over the term of     having to make arrangements to notify your bank or
your current financial commitments.                         building society.

Be sure that you wish to consolidate your existing          You may find a Direct Debit mandate for you to
financial commitments.                                      complete at the back of our application form.
                                                            Alternatively, you can ask us to supply you with one at
                                                            any time.
                                                            We are able to offer other methods of payment and
If we are prepared to accept a guarantee from someone       details of these are available on request. However, we
in respect of your proposed loan, you should note that it   would advise that a monthly fee will be charged for any
may be necessary for us to disclose your confidential       payment method other than by Direct Debit to cover the
financial information to them. The person giving the        administration required to process this.
guarantee will be required to take independent legal
                                                            You should be aware that if you are late in making a
advice to ensure that they understand the obligations of
                                                            payment, you will incur an arrears fee, details of which
being a guarantor.
                                                            are set out in the Tariff of Charges. In the event that
                                                            payments continue to be missed, we may commence
                                                            proceedings to repossess the property so that it may be
Making your mortgage payments
                                                            sold and the mortgage repaid. If you have taken out a
As part of your commitment to us, you are required to       Buy-to-Let mortgage, late payments will result in us
make payments to us in advance each month for the           arranging the immediate appointment of a receiver who
amount which we will have previously advised you in         will collect the rent from the property and pay this to us.
your Mortgage Offer.                                        You will be charged fees for this. Please refer to the Tariff
                                                            of Charges.
The approved method of payment is by Direct Debit on
the first of each month from either your bank or building

Methods of repaying your mortgage                            We strongly recommend that you make arrangements to
                                                             have some means of repaying this type of loan in the
Interest or Part Interest only Mortgages                     unfortunate event of your death. You should contact
Interest or Part Interest only Mortgages are where           your intermediary for further information regarding life
interest is paid on the loan each month and all or part of   assurance.
the capital remains outstanding. You make a separate
payment into a repayment vehicle such as an
endowment, a pension, or an ISA in order to repay the        Making a lump sum payment
loan at the end of the term.
                                                             You are able to make a part lump sum payment to your
It is your responsibility to ensure that a repayment         account at any time during the loan term in order to
vehicle is in place to repay the loan at the end of the      reduce the level of future repayments. The minimum
term and to check on its performance on a regular basis.     amount that you can pay to your account is £1,000. An
If there is no means of repaying the loan, we will seek to   early repayment charge for reducing your balance may
recover the outstanding loan through the sale of your        be added to your account calculated in line with the
property.                                                    early repayment charges, which will be detailed in your
                                                             Mortgage Offer.
Under the Financial Services and Markets Act 2000, we
are unable to give financial advice about the type of
repayment vehicles available and you should therefore        Repaying your mortgage early
contact your intermediary for further information.
                                                             If you decide to repay the whole loan before the end of
                                                             the loan term, an early repayment charge may be made.
Repayment Mortgages                                          The early repayment charge will also apply if you are
                                                             moving house and do not keep the same terms and
Also known as a capital and interest mortgage loan, you      conditions as your original mortgage. We will waive any
repay part of the capital each month plus interest on the    early repayment charge in the unfortunate event of
outstanding amount over an agreed number of years. At        death of a borrower during the term of the mortgage.
the end of the term, the loan will be repaid in full,        Full details of the early repayment charges that may be
provided all payments are made when due.                     payable will be set out in your Mortgage Offer. If you

need to know the exact amount, you can request a                knowledge of benefits available, e.g. unemployment,
redemption statement, which we will provide you with,           family credit, income support and can help you with your
free of charge. In the event of early redemption, you will      claim application. For your convenience, they will visit
also be required to pay a redemption administration fee         you in your home to discuss any issues with you
for the release of your Deeds (details in the Tariff of         however please note the fee shown in the Tariff of
Charges).                                                       Charges will be charged for this service and added to
                                                                your account.

                                                                We are also able to offer an insurance policy, Accident,
Insuring your home or property
                                                                Sickness and Unemployment (“ASU”) which will cover
As part of the terms of your mortgage, you are required         you in the event that you are unable to work because
to make provisions to insure your home against any              you have become sick, had an accident or have been
damage that might occur, such as subsidence, flooding,          made redundant. This policy is not a condition of you
malicious damage or vandalism, etc. We do not dictate           taking out a loan with us, however, if you are interested
who that policy should be with, however, we do insist on        in finding out more about this policy, full details of the
seeing a copy of the schedule before we can complete            scheme are available on request.
your mortgage. If you take out insurance cover with
                                                                If, in the unfortunate event that we do have to take legal
another insurer, a fee will be charged for assessment of
                                                                action to recover any debt, solicitors fees and
the policy and administration involved as shown in the
                                                                disbursements which have been incurred in this respect
Tariff of Charges. We have buildings/buildings and
                                                                will be added to your account.
contents policies available and details of these will be
provided on request.

Life Assurance                                                  We are committed to providing you with a high level of
                                                                service. However, we know that sometimes things can
Life assurance taken for a specific term can remain level
                                                                go wrong. If you are unhappy with any aspect of our
or decrease with the balance of the mortgage, it will pay
                                                                service we would like you to talk to us about your
out only on the death of the assured and can be used to
                                                                complaint to give us an opportunity to put it right.
redeem the mortgage.
                                                                We will send you a written acknowledgement of your
Although we do not require you to have a life policy
                                                                complaint within 5 working days of receipt, and where
assigned to us we strongly recommend that you make
                                                                possible, a full written response within 4 weeks
arrangements to have some means of repaying the loan
                                                                thereafter. If we are unable to provide a full written
in the unfortunate event of your death.
                                                                response, within the 4 week period, we will send you a
                                                                further letter, setting out the current position, together
                                                                with an indication of the further timescale involved to
Financial difficulties
                                                                respond fully; this will be no later than 8 weeks from the
We understand that financial situations may change,             date of receipt of your complaint. If we are unable to
perhaps because you have become ill and are unable to           provide a full written response within 8 weeks, then we
work or because you have been made redundant. We are            will provide a further date, agreed by you, in which a full
sympathetic in these circumstances, however, you must           written response will be provided.
advise us immediately if you feel you may have difficulty
                                                                In the first instance, please raise any complaint with the
in meeting your monthly payments as the sooner you
                                                                member of staff who has been helping you. They will do
can let us know, the easier it will be for us to discuss this
                                                                everything they can to resolve the issue, but if you feel
with you and help you find a solution.
                                                                that you would like to take it further please contact
We have a team of counsellors who are trained to give           The Complaints Manager at GMAC-RFC Limited.
expert guidance and assistance in helping you to resolve        Eastern Gate, Brants Bridge, Bracknell, Berkshire RG12 9BZ.
your financial situation. They have an in-depth

In the unlikely event that we cannot reach a satisfactory      Q. Is it a condition of my mortgage that such insurance
conclusion at this point, you have final recourse to the         is taken out and whose responsibility is it to ensure
Mortgage Code Arbitration Scheme, whose address 12               that this insurance is in place?
Bloomsbury Square, London WC1A 2LP.
                                                               A. It is a condition of your mortgage that adequate
                                                                 buildings insurance is in place throughout the term
                                                                 of the mortgage. It is your responsibility to ensure
Your questions answered
                                                                 that this insurance is in place. For certain products, it
(Please note: Full definitions of words in italics are given     may be a condition of the mortgage that you take out
in the Glossary.)                                                a particular insurance policy with us. If this is the case
                                                                 it will be specified within your mortgage
Q. What would happen if I wanted to repay my
                                                                 documentation. Any of the other insurance products
   mortgage early, or if there is a change in my personal
                                                                 mentioned in the previous question are at your
A. Early repayment of a mortgage, or changes in
                                                               Q. What costs, fees or other charges in connection with
   personal circumstances (for example, long-term
                                                                 my mortgage will be payable by me?
   sickness or relationship breakdown) can have adverse
   financial consequences, depending on the initial type       A. Please refer to the Tariff of Charges supplied with this
   of mortgage. Your mortgage may be subject to early            Mortgage Guide.
   repayment charges, full details of which will be
                                                               Q. When would my account details be passed to a credit
   included in your Mortgage Offer. Early repayment
                                                                 reference agency?
   charges will be waived in the unfortunate event of
   death of a borrower during the term of the mortgage.        A. We will use information provided on your application
   Where your personal circumstances change, and you             form for credit assessment. We may also give certain
   redeem your mortgage you may incur an early                   information to credit reference agencies. Details of
   repayment charge.                                             the conduct of your mortgage account will be
                                                                 disclosed to credit reference agencies and failure to
Q. Can I take out a further advance on my mortgage?
                                                                 comply with the terms and conditions of your
A. We will consider applications/requests for additional         mortgage may also result in your details being
   borrowing secured on your home subject to a                   disclosed.
   qualification period of 6 months’ mortgage payment
                                                               Q. Can I have a second mortgage on my property?
   receipts and satisfaction of our loan criteria
   requirements. A fee will be charged for the                 A. We will give consideration to any request for a second
   assessment of your further advance application and            charge. Once we have given consent, a fee will be
   administration involved. There will also be a fee             charged for the administration, as shown on the Tariff
   charged if a valuation of your home is required. These        of Charges.
   fees are shown in the Tariff of Charges.

Q. What insurance services can GMAC Residential
   Funding arrange?

A. Buildings Only, Combined Buildings and Contents, and
   Mortgage Payment Protection (also known as ASU).
   From time to time we may offer additional services.

Throughout the time you are arranging your mortgage, you will come across a wide range of technical terms, so we
have produced this guide to give you an explanation of these terms. These are not legal definitions but rather clear
descriptions in everyday words.

“APR”                                              Abbreviation for Annual Percentage Rate. Where an APR is quoted it
                                                   will be based on the overall cost for comparison.

“arrangement fee”                                  This fee is charged for arranging a loan and it covers administration

“assignment”                                       A legal transfer of rights or benefits e.g. in your mortgage, a lease or
                                                   life assurance policy.

“assured shorthold tenancy”                        Tenancy under the Housing Act which provides the right for an
                                                   individual to live in a property which is his/her principal home for a
                                                   fixed period of time at a rent agreed with the landlord.

“accident, sickness and unemployment” (ASU)        Abbreviation for Accident, Sickness and Unemployment insurance,
                                                   also know as a Mortgage Payment Protection policy. This is an
                                                   insurance to protect your mortgage repayments in the event of loss
                                                   of earnings due to long term illness, accident or involuntary

“Bank of England base rate/repo rate”              This is the lending rate set by the Bank of England which acts as a
                                                   benchmark for other interest rates (except LIBOR).

“booking fee”                                      A payment may be required at application to secure a particular
                                                   interest rate. The payment of a booking fee does not always
                                                   guarantee that a mortgage offer will be made.

“buildings and contents insurance”                 Buildings insurance This covers the actual building i.e. your home,
                                                   against damage by fire, storm, subsidence and so on. The amount of
                                                   cover should be sufficient to completely rebuild the property. This
                                                   rebuilding cost is given on the mortgage valuation report.

                                                   Contents insurance This covers your personal belongings against
                                                   loss or damage. It may also cover certain other liabilities.

“buy-to-let mortgage”                              A loan to enable you to purchase a property for letting purposes.

“capital and interest mortgage”                    Please see Repayment Mortgage.

“capped rate”                                      Capped rate loans offer you an interest rate guaranteed not to rise
                                                   above a certain level but if interest rates fall then your payment rate
                                                   will too. It gives you the best of both worlds – a capped rate loan
                                                   combines the savings of a variable rate when interest rates are
                                                   falling and the peace of mind of having a fixed rate when interest
                                                   rates are rising.

“Cashback Mortgage”                                A loan which offers you a cash lump sum on completion. The
                                                   amount payable will be detailed in the Mortgage Offer and will be
                                                   sent to either you or your solicitor.

“certificate of title”                             The document prepared by the solicitor for us confirming all
                                                   formalities are satisfactory prior to completion. Used by solicitors in
                                                   England and Wales.

“completion”                                       The formal conclusion of the transaction when the mortgage
                                                   monies are handed over and legal formalities are dealt with.

“contract”                 A legal agreement between purchaser and seller which binds both
                           to complete the sale and purchase of the property. It is prepared in
                           duplicate, and a copy is signed by each party. When these contracts
                           are exchanged by your solicitor, the obligation to buy and sell
                           becomes legally binding.

“conveyance”               The Deed/document that transfers the land where the title is

“direct debit”             This is an instruction to your bank/building society to allow us to
                           take monthly mortgage payments direct from your account.

“disbursements”            Amount that your solicitor has to pay out on your behalf, in
                           connection with the transaction e.g. search fees.

“discounted rate”          This rate offers you a reduction to the standard variable/LIBOR rate
                           (which may include a margin) for a fixed period of time. However,
                           the rate will still fluctuate when we reset our rate.

“early repayment charge”   A sum which has to be paid if the loan is repaid or varied in whole
                           or in part within a certain time. The actual amount due would be
                           dependent on when you redeemed or varied and would be stated in
                           your Mortgage Offer. Early repayment charges will be waived in the
                           unfortunate event of a borrower dying during the term of the

“endowment”                An investment vehicle combined with life assurance, over a specific
                           term. Typically used in conjunction with an interest only mortgage.

“equity”                   The difference between the value of the property and the amount
                           of loan outstanding on it.

“feuhold”                  The Scottish term for the right of absolute ownership in land.

“fixed rate”               With fixed rate loans your interest rate is guaranteed not to change
                           for a set period of time, so you will have the security of knowing
                           exactly what your mortgage payments are going to be each month.

“freehold”                 The right of absolute ownership in land.

“further advance”          Additional monies advanced on your loan and secured on your property.

“guarantee”                An undertaking given by a person called the guarantor promising to
                           pay the debts of another if that other person fails to do so.

“ground rent”              An annual sum paid by the leaseholder to their landlord, as a rental
                           amount for the ground on which the property stands, which the
                           landlord actually owns.

“insurance fee”            The amount charged by us for checking that the building insurance you
                           have arranged, if not arranged through us, provides the necessary cover.

“interest only mortgage”   Only interest is paid on the loan each month and all the capital
                           remains outstanding. You make a separate payment into an
                           investment product such as an endowment, pension or ISA (a
                           repayment vehicle). Alternatively, you may have funds elsewhere
                           which will repay the loan, e.g. inheritance monies. We do not require
                           a specific repayment plan although separate life assurance is
                           recommended. Whatever method you choose, you should make sure
                           that at the end of the mortgage term you are able to pay back from
                           your own resources the amount you have borrowed.

“interest rate”                      This is the rate at which the interest charged on a loan is calculated.

“Individual Savings Account” (ISA)   A tax efficient investment, subject to certain limits, which can be
                                     used to repay the capital at the end of the term of an interest only

“land registry fee”                  A fee paid to H.M. Land Registry to register changes to the title e.g.
                                     new ownership.

“lease”                              A contract with rights and obligations between Landlord and Tenant
                                     where the Landlord grants the Tenant a Leasehold interest in land in
                                     return for rent.

“leasehold”                          A right to exclusive possession of land for a fixed term of years,
                                     where the freehold is owned by a third party.

“LIBOR linked rate”                  LIBOR stands for London Inter Bank Offered Rate and is the interest
                                     rate at which banks will lend to each other. LIBOR can vary day by
                                     day and is not linked directly to Bank of England base rate. So, for
                                     mortgage purposes, the interest rate is set at the beginning of the
                                     mortgage and remains at that level until LIBOR is reset usually on
                                     the 12th March, June, September and December of each year, and so
                                     on throughout the mortgage term.

“life assurance”                     An insurance policy designed to pay out a specified amount in the
                                     event of your death.

“local authority search”             A search, made by the solicitor, at the local authority for the area in
                                     which the property is situated. This search would reveal details such
                                     as the maintenance responsibility of roads and footpaths serving
                                     the property, road proposals in the immediate vicinity, whether the
                                     property is connected by the mains drain, any planning matters
                                     affecting the property or which could adversely affect the property
                                     in the future.

“local search indemnity insurance”   An insurance policy obtained on a remortgage or purchase by us in
                                     lieu of a local authority search paid for by the owner or purchaser.
                                     The fee is listed in the Tariff of Charges.

“loss of rent insurance”             An insurance to cover against periods when tenants are not paying
                                     rent required for Buy-to-Let mortgages only.

“margin”                             The additional rate of interest specified as the margin in the
                                     Mortgage Offer e.g. 3% over the LIBOR rate. This would mean that if
                                     LIBOR were at 7%, the interest rate would be 10%. The margin
                                     applied will depend on the type of scheme you are taking and your
                                     personal and financial circumstances.

“mortgage”                           A loan which is secured on your home.

“Mortgage Conditions”                These are printed conditions contained in a booklet which, together
                                     with the Mortgage Offer, the Special Conditions, and the Standard
                                     Offer form the complete terms of your mortgage following

“mortgage offer”                     The document which states we are prepared to offer a loan for the
                                     purchase or remortgage of a residential property. This document
                                     will give details on the exact amount of money that we will be able
                                     to lend to you and on what terms.

“mortgage term”                   The length of time the mortgage runs for e.g. 25 years.

“mortgage valuation”              This is done on our behalf and is purely to find out the suitability of
                                  the property for lending purposes and what the property is worth. A
                                  mortgage valuation report prepared on our behalf may not be relied
                                  on by you for any purpose.

                                  We would strongly recommend for your own peace of mind having
                                  either a Home Buyers Report or a Full Structural Survey completed,
                                  as these will give much more in-depth information on the condition
                                  of your chosen property. You should contact a qualified surveyor
                                  (either Royal institution of Chartered Surveyors or Incorporated
                                  Society of Valuers and Auctioneers) for full details and charges.

“part interest only”              This is where two separate methods are used to repay the one
                                  mortgage balance. Typically, an endowment/pension/ISA method
                                  (interest only) is used in conjunction with a repayment method.

“pension”                         An investment vehicle, which is used to provide a pension: part of which
                                  can also be used to repay your mortgage, subject to certain limitations.

“purchase price”                  The amount agreed to be paid to buy a property. This can be higher
                                  or lower than the actual valuation. We will lend an amount based
                                  on the lower of the purchase price or valuation.

“redemption/part redemption”      When the loan, or part of it, is paid off.

“redemption administration fee”   Charge made for discharging the mortgage at the end of the
                                  mortgage term.

“remittance fee”                  Please see Telegraphic Transfer Fee.

“remortgage”                      The replacement of the original loan with new finance. You can
                                  remortgage to obtain lower monthly payments or, if you have sufficient
                                  equity in your property, to raise money for a number of purposes.

“repayment mortgage”              (Also known as a Capital and Interest Mortgage). With this type of
                                  mortgage you repay part of the capital each month plus interest on
                                  the outstanding balance. Your payments will gradually reduce the
                                  outstanding amount over an agreed number of years and at the
                                  end of this term the mortgage will be repaid in full. Separate life
                                  assurance is recommended.

“repayment periods”               We arrange loans for a specific term, decided at the outset, from 5
                                  to 30 years. The maximum age for a mortgage with us is 75 years
                                  old at the end of the term.

“report on title”                 The document prepared by the solicitor for us confirming all
                                  formalities are satisfactory prior to completion. Used by solicitors in

“retention”                       An amount kept back from the loan by us until certain works to the
                                  property are complete.

“right to buy”                    The Housing Act 1980 provides for tenants renting from their local
                                  authority or a Housing Association who may wish to buy their
                                  home. Full details of eligibility are available from the relevant local

“second mortgage charge”        An additional loan secured on your property that you take out with
                                another lender.

“solicitor”                     The lawyer who represents the parties in a transaction and takes
                                care of all the legalities.

“special conditions”            These are conditions specific to your mortgage and are contained in
                                your mortgage offer.

“stamp duty”                    This is a government tax on the price paid for a property.

“standard offer conditions”     These are printed conditions which form part of the terms on which
                                the mortgage loan is advanced.

“standard variable rate”(SVR)   A type of variable interest rate, that is set and charged by the
                                mortgage lender, usually dependent on market conditions and/or
                                the Bank of England’s base rate.

“subject to contract”           This term is used when the sale of a property has been agreed, but
                                before contracts have been exchanged. Either the seller or purchaser
                                can withdraw from the agreement at this stage.

“telegraphic transfer fee”      (Also known as Remittance Fee.) This is charged for sending sums of
                                money electronically.

“tenure”                        The type of ownership of a property e.g. freehold or leasehold.

“term assurance”                A form of life assurance for a certain period of time which pays a
                                lump sum on death.

“title”                         The right of ownership of land.

“title deeds”                   The documents which prove the Title. These may be in the form of
                                Conveyances or may be an extract of the records held at H.M. Land

“transfer”                      The Deed/document that transfers the land where the title is

“transfer of equity”            Where two or more people have an interest in a property and one or
                                more persons transfer their share to the other or others .

“undertaking”                   A promise to complete a task.

0870 770 8030

GMAC Residential Funding
Communications House
Shuttleworth Mead Business Park
Blackburn Road, Padiham,          t 0870 770 8030
Burnley, Lancashire BB12 7SN      f 0870 770 8040
dx 29303 Padiham           30018 July 2003 (Padiham Version)

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