Choosing a mortgage
The Mortgage Code
The sale of mortgages in the UK is a £500 billion business.
Huge. There are tens of thousands of intermediaries and
advisers offering thousands of mortgages from hundreds of
lenders. And there is still no legislation in place to control
many of the practices of those involved in the industry.
For years, some lenders have got away with practices that
could at best be described as dubious and at worst, verging
on the criminal. Catches, clauses and caveats have been
hidden away in the small print of policy documents, often
with hard-hitting financial repercussions for the unsuspecting
customer.
Although the sale of mortgage advice is regulated by the
FSA, there are no plans to regulate the sale of mortgages
themselves, so the Council of Mortgage Lenders (CML) introduced
the Mortgage Code in an effort at self-regulation. It is
a set of principles and practices that lenders voluntarily
subscribe to, which should help protect the interests of
the borrower from unscrupulous practices. The code sets
out how a lender or intermediary should act when arranging
your mortgage, as well as how you should be dealt with once
your mortgage is in place. It also tells you how to complain
in the event of a lender not keeping to the code and who
to complain to. If a lender or intermediary that subscribes
to the code fails to meet its standards and you suffer as
a result, you may have the right to compensation under an
independent complaints scheme.
According to the code, there are three different levels
of service that your lender or intermediary may provide
to help you choose a suitable mortgage:
1. Advice. This involves a full consultation, information
about as full a range of products as is appropriate and
a recommendation of the most suitable mortgage for you.
2. Information on a range of products. You are given all
the information, but it is down to you to decide which product
is most suitable. You should be informed whether this range
of products is from a number of selected lenders, or from
the market as a whole.
3. Information on a single product. This level is offered
where only one mortgage is available or if you have already
decided on your chosen product.
For all levels of service, you should be given information
on the following areas of the your chosen mortgage:
The 10 mortgage code commitments
The code has 10 main commitments that outline the principles
that should help to guarantee that lenders and intermediaries:
