Mortgage Code
The Mortgage Code is a code of conduct to be adhered to in the
mortgage field and is over seen by the Mortgage Code Compliance
Board. It is their job to make sure that you are fully informed
as the borrower and sufficiently protected when taking out a mortgage.
The Board make sure compliance through an ongoing curriculum of
inspection and fulfilment cooperation visits. In addition, 'mystery
shopping' and customer investigation exercises are regularly conducted
to make sure that mortgage consumers are indeed getting the full
benefits of the Code's protection.
Purpose of the mortgage code
The Mortgage Code sets values of good practice as to how mortgage
lenders and intermediaries deal with their customers. All mortgage
lenders and intermediaries that are registered with the Board keep
strictly to the rules and principles set out in the Mortgage Code.
The Mortgage Board is a non-statutory supervisory body. Its role
is to regulate the supply and stipulation of mortgage advice in
the UK by ensuring firms registered under the Mortgage Code, meet
all the principles of the Code.
The Financial Services Authority regulates financial institutions
and mortgage lenders. It also regulates the advertising of UK mortgages
under the Financial Services and Markets Act.
You, as a prospective mortgage customer, must be given a copy of
the leaflet 'You and Your Mortgage' at your first conversation about
a mortgage. The leaflet outlines the standards to which mortgage
lenders and intermediaries have to adhere.
When sourcing your mortgage you should check that your lender or
intermediary is registered under the Mortgage Code. More than 150
lenders and 13,000 intermediary organizations, covering virtually
the entire market, have registered under the Code. If a mortgage
lender or intermediary fails to meet the standards of the Mortgage
Code, and you, the borrower, suffer as a result, you have the right
to seek compensation under an obligatory complaints procedure.
Advise of the DTI
The DTI (Department of Trade and Industry) has put together a checklist
of key questions of which customers should refer to when thinking
of taking out a mortgage. This is based on information from research
conducted on issues that have caused problems for customers. It
is included as additional information that may be useful to you
when choosing a mortgage, and to help you avoid potential problems.
1. What sum can I afford to borrow?
2. How do I go about knowing which mortgage rate is the best for
me?
3. What method of repayment should I choose?
4. Do I have the option of making lump sum payments?
5. Will I incur redemption penalties?
6. Is compulsory insurance tied in with the mortgage?
7. Will there be UN foreseen charges to pay? - Examples may include
intermediary's arrangement fees and lenders' application fees. The
Mortgage Board's experience highlights the importance of having
a full knowledge of all costs involved.
8. What happens in the eventuality I an unable to pay?
9. What about hidden clauses in the small print?
In addition it is recommended that you make yourself aware of the
foundation on which interest is calculated on your mortgage.
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