The Mortgage Code
The minimum standards that mortgage brokers and lenders should adhere to
Update: As of 31st October 2004, the mortgage industry is directly regulated by the Financial Services Authority and the Mortgage Code has ceased to apply
What does it cover?
A full copy of the code must be given to you by your mortgage provider if you ask for it, but here are some of the main areas it covers:
- You should be told about all fees and charges in advance, including any possible penalties for paying your mortgage off early
- The method of repayment (capital, endowment, interest only etc) should be clearly stated
- The kind of interest rate should be explained, whether it's fixed, capped, variable etc, along with details of any changes (for example, what will happen when any introductory period has finished)
- Whether you need to take out insurance, and if there are any restrictions on who you insure with
- Whether there are any restrictions on moving home during the mortgage term
- What your repayments will be, both initially and after any discount has ended
What if I receive bad advice on mortgages?
Lenders' and brokers' compliance with The Mortgage Code is monitored independently. Any company who signs up to the code must also be a member of a complaints system such as the Financial Ombudsman Service or the Mortgage Code Arbitration Scheme.
Your lender or broker must tell you which scheme they are a member of, and should you be a victim of a company not following the code properly, you may be able to claim up to £100,000 in compensation.
The Future
The Government has announced that the mortgage industry will shortly become fully regulated, in line with other areas of the personal finance industry. This is due to take place in October 2004, and means that the mortgage industry will be overseen by the Financial Services Authority, the watchdog that currently regulates credit cards, loans, and other personal finance products.
Further Reading
The Official Mortgage Code Web Site provides more information, or you can request a copy of the full code from your lender or broker.
Update: As of 31st October 2004, the mortgage industry is directly regulated by the Financial Services Authority and the Mortgage Code has ceased to apply
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