Regulatory Protection for Consumers and Buy to Lets
Regulatory Protection for Consumers and BTL
To understand the level of regulatory protection you get, you need to establish a few things. First of all, find out whether the mortgage you are proposing to take out is regulated by the Financial Conduct Authority. A regulated mortgage gives you much more protection. Firstly, in how it is sold. Secondly, in your ability to complain if it is not sold correctly.
What you should expect…
Your broker will normally inform you at the outset. However, in the case of regulated mortgages, it is mandatory for your broker to explain the scope of their service beforehand. This includes the types of products offered, the likely fees involved and information about complaints. Also, information on how they are regulated.
When getting a regulated mortgage, your broker should give you full advice on mortgages that are best for your circumstances and needs. This means carrying out a detailed fact find and only offering products which the broker deems suitable. You should be able to rely on this advice, provided you have given accurate information. If you have a material complaint which the broker won’t resolve, you can refer the matter to the Financial Ombudsman Scheme.
Is my mortgage regulated?
Regulated mortgages are aimed at consumers who may not be experienced in taking finance of this nature. The following are examples of mortgages which are typically regulated. They should be offered on a fully advised basis:
A mortgage secured on your main residence taken out by the homeowners in their personal names.
A mortgage taken out on a buy to let property where the property is or will be occupied by family members.
Borrowers taking out regulated mortgages enjoy a higher level of protection.
Is my mortgage non-regulated?
Non-regulated mortgages usually have some business or commercial element. It could depend on the type of property being offered as security, who is borrowing the money (perhaps a company) and the purpose of the mortgage. The mortgage may be offered on a non-advised basis. It’s faster and gives businesses the options to do as they please. The broker will ordinarily offer products which closely match the requirements. Or, given the circumstances and relevant information, it allows borrowers to decide which they feel is suitable for themselves.
Borrowers taking out a non-regulated mortgage on a non advised basis are taking more responsibility to ensure the product meets their needs.
2 out of 3 borrowers get a lower rate than our representative example of a regulated secured loan below:
Mortgages and Remortgages
£80,000 over 240 months at an APRC OF 4.3% and a discounted variable annual interest rate for two years of 2.12% at £408.99 per month followed by 36 payments of £475.59 and 180 payments of £509.44. The total charge for credit is £39,873 which includes a £995 broker / processing fee and £125 application fee. Total repayable £119,873.
Secured / Second Charge Loans
£63,000 over 228 months at an APRC OF 6.1% and an annual interest rate of 5.39% (Fixed for five years – variable thereafter) would be £463.09 per month, total charge for credit is £42,584.52 which includes a £2,690 broker / processing fee. Total repayable £105,584.52.
£4,000 over 36 months at an APR OF 49.9% (fixed) and an annual interest rate of 49.9% would be £216.21, total charge for credit is £3,783.56. Total repayable £7,783.56.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME
REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
If you have been introduced to Promise Money by a third party / affiliate, Promise may pay them a share of any fees or commission it earns. Written terms available on request. Loans are subject to affordability status and available to UK residents aged 18 or over. Promise Money is a trading style of Promise Solutions Ltd. Promise Solutions is a broker offering products which represent the whole of the specialist second mortgage market and is authorised and regulated by the Financial Conduct Authority – Number 681423.
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