Introduction To Compliancy

Mortgage Compliance

The FSA examines mortgage products in a similar way to personal pensions, unit trusts and other financial investments.

Introduction To Compliance

Get a Free Quote Mortgage Compliance - Introduction

The Financial Services Authority (FSA) has been responsible for mortgage compliance since October 31st, 2004.

In theory, this means that the FSA examines mortgage products in a similar way to personal pensions, unit trusts and other financial investments. Around 100 mortgage lenders and over 7,000 mortgage brokers and independent financial advisers are regulated by the FSA.

Mortgage Compliance - The Basics
The FSA lays down rules that information about mortgage products must be complete, transparent, unambiguous and easy to compare with similar products on a 'like for like' basis. Mortgage providers normally make this information available to potential borrowers in the form of a Key Facts Illustration (KFI).

Mortgage Compliance - Key Facts Illustration (KFI)
A Key Facts Illustration (KFI) can be several pages in length and usually follows a standard template:
Bullet Point general description of the KFI;
Bullet Point service being offered by the mortgage broker or lender;
Bullet Point customer's requirements, e.g. amount to be borrowed, type of mortgage, mortgage term, purchase price of the property;
Bullet Point mortgage features, e.g. type of mortgage, mortgage term, interest rate charged, restrictions, linked products;
Bullet Point overall cost of the mortgage and Annual Percentage Rate (APR) charged;
Bullet Point number and amount of monthly payments;
Bullet Point explanation of associated risks, e.g. if interest rates rise or borrower's income falls;
Bullet Point fees payable to lender and broker;
Bullet Point insurance required and whether tied to mortgage provider;
Bullet Point early repayment or transfer options;
Bullet Point overpayment options;
Bullet Point additional features, e.g. options for underpayments or holiday payments, cash-back and other incentive payments, linked current account;
Bullet Point brokers' fees paid by mortgage lender;
Bullet Point additional general information about mortgages;
Bullet Point mortgage provider's contact details.

Mortgage Compliance - Exceptions
Perhaps, surprisingly, some types of mortgage do not come under the auspices of the FSA. Buy to let mortgages and equity release schemes are not covered by the mortgage compliance regulations. The logic for excluding these types of mortgage product is that they are considered to be commercial loans rather than traditional mortgages. However, many mortgage providers will provide KFIs, upon request, for these types of products, which are often more complex to understand than more conventional mortgages.

Summary
Bullet Point Mortgage compliance is regulated by the Financial Services Authority (FSA);
Bullet Point mortgage compliance information is usually provided to potential borrowers in the form of a Key Facts Illustration (KFI);
Bullet Point buy to let mortgages and equity release schemes are excluded from personal finance mortgage compliance regulations.

Online Mortgage Enquiry and Quote

Online Enquiry...

If you would like to receive a quote for a mortgage from a broker please
Click here...

Mortgage Calculator

Calculate

Typical Interest Payments

First Time Buyers

2.89%

Purchased Fixed

2.89%

Discounted Rate

2.99%

Buy To Let

2.99%

Commercial

3%

 

 

Affordability Calculator

Calculate
Get a Mortgage Quote

Mortgage News Feed Mortgage News Feed

Questions & Answers

Read about general questions asked by brokers and lenders and the best ways to answer...

Mortgage Glossary

Search for terms beginning with the letter:

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z