Saffron Building Society Mortgages Savings Investments Insurance Loans. Residential mortgage conditions.

Transcription

1 Saffron Building Society Mortgages Savings Investments Insurance Loans Residential mortgage conditions

2 Saffron Building Society Residential Mortgage Conditions (England and Wales, 2006) IMPORTANT NOTICE These conditions govern the terms of your mortgage with the society and should be kept safe for future reference 1. Definitions and interpretation 1.1 In these conditions certain words and phrases have special meanings. Where you see a word or phrase that appears in bold this is to remind you that the word or phrase has the following meaning:- base rate business day means the official repo rate of the Bank of England (which is the technical name that is given to what is commonly called the Bank of England s base rate) as at close of business on any given day or any other rate that replaces it used by the Bank of England or any other body that takes over the Bank of England s responsibility for setting such an interest rate means Monday to Friday not including any bank or public holidays change date has the meaning given to it under condition cleared funds completion conditions expenses further advance means any money that is available to use, including where any cheque has been cleared by the issuing bank or building society means the day on which we first advance the loan to you means the conditions set out in this booklet or any newer version which you agree with us shall take their place means our costs and expenses that we reasonably incur in connection with the mortgage and/or your property. Some examples of these costs and expenses are given in condition 18 means any additional money that we agree to lend to you, after the date of the original loan (which is not part of the amount we agreed to lend you in our offer of mortgage) to be repaid over the mortgage term and which is lent to you subject to these conditions (it will not include any amounts we lend to you under the Consumer Credit Act 1974, for example an unsecured personal loan) 1

3 guarantor interest interest only arrangement means any person or company who has agreed to guarantee your repayment of all or any part of the mortgage debt and who has given a guarantee to us means the interest that we charge you under the mortgage means where we have agreed that your monthly payments (or part of your monthly payments) will only be based on the payment of interest and not the repayment of the loan itself, usually this will happen when we have agreed that you will repay the loan (or part of the loan) itself by making separate payments to an investment policy interest period means the period we specify in the offer. We can change the interest period under condition 4.6 interest rate investment policy legal charge LIBOR means the particular rate of interest that we charge you under these conditions means a separate savings or investment policy that you may have including endowment policies, term assurance policies, an individual savings account (an ISA), a personal equity plan (a PEP) or any other form of investment which you have taken out to ensure that the loan is repaid by the end of the mortgage term means the security over the property to secure payment of the mortgage debt means in respect of any LIBOR interest period, the rate (rounded up to three decimal places) which at or about 11am London time on the quarter day immediately preceding that LIBOR interest period, is shown as the rate of interest for the 3 month sterling deposits by reference to the display designated as the British Bankers Association Interest Settlement Rate displayed on the Reuters screen page number 3750 or any Reuters page which replaces screen page number 3750 for the purposes of displaying that information. If, in respect of any LIBOR interest period, it is not possible to determine LIBOR by reference to any of the above sources, then LIBOR for that LIBOR interest period shall be such other rate of interest as we reasonably decide represents a comparable rate of interest for 3 month sterling deposits at or about 11am (London time) on the quarter day immediately preceding that LIBOR interest period and as notified to you within 14 days of our decision LIBOR interest means a period beginning two business days before a quarter day period and finishing immediately before two business days before the next quarter day provided that no LIBOR interest period may extend beyond the last day of the mortgage term loan margin monthly payment mortgage mortgage account means the original amount of the loan that we set out in the offer plus any other money that we have lent to you which you have not yet repaid, for example a further advance means any additional rate of interest we charge you as set out in the offer means the money that you must pay to us each month during the mortgage term as set out in the offer or any other agreement. We can change the monthly payment under condition 4 means the agreement we have with you which is set out in the mortgage deed and these conditions and the offer form part of that agreement means the account and records that we will keep and maintain to operate the loan and to enable us to determine how much money you owe us at any time 2

4 (i) the amount of the loan that you have not yet repaid (ii) interest which has become due for payment but you have not yet paid (iii) our expenses which you have not yet paid mortgage deed means the legal document you sign giving us a legal charge over the property, as our security for giving you the loan mortgage term means the period over which we have agreed you can repay the mortgage debt as set out in the offer new base rate has the meaning given to it under condition offer mortgage debt means all of the following:- means:- - in relation to the loan, our written offer to you to lend you money for which you will give us a legal charge, - in relation to any further advance, our written offer to you to lend you further money, which will form part of the loan and will be secured by the mortgage deed, and in both cases the offer includes any special conditions which are set out in the offer letter. If changes are made to the original offer then the term offer shall mean the last offer letter we sent to you before completion overpayment payment date means an amount paid by you which is more than the monthly payment (but does not include any expenses you owe us) means the day of the month on which you are required to make your monthly payment as set out in the offer. We can change the payment date under condition 4 payment means your right to miss, or make a reduced, monthly payment as set out in holiday condition 5 property quarter day means your home or other property which is described in the mortgage deed, together with any fixtures and fittings and any later alterations or additions that you may make to it means the 1st of every March, June, September and December, or if that day is not a business day, the next business day which follows it receiver has the meaning given to it under condition reset date has the meaning given to it under condition special rate standard rate means any special rate of interest that we may agree with you to apply to the whole or part of the loan means our standard rate of interest from time to time, more commonly known as our base rate sub account has the meaning given to it under condition tracker rate we, us and our means the base rate at completion or the reset date as applicable means the lender named in the mortgage deed, or where there has been a transfer of the mortgage (see condition 20) the person who, at the relevant time, has the benefit of the mortgage 3

5 withdrawal withdrawal limit you and your means any withdrawal of money from the loan where such a withdrawal is permitted by the offer or these conditions means the total of any previously made overpayments less the total of any previous withdrawals means the person(s) named as the borrower in the mortgage deed, and will include anyone who takes over that person(s) legal rights and duties, for example a personal representative if the original borrower dies, or any person we have agreed in writing can take your place under the mortgage 1.2 If more than one of you is borrowing money under this mortgage then these conditions apply to all of you equally, that is we can choose to take action to recover all or any part of the mortgage debt against any one of you or all of you. 1.3 In these conditions references to a month mean a calendar month. 1.4 Where in these conditions there is reference to any law or other rule or regulation such a reference will be taken to include all changes made to, or replacement for that law, rule or regulation. 1.5 Where in these conditions we use the word changes this includes changes that have actually taken place but also any changes that we reasonably believe will happen. 1.6 Where words have been used in the singular they shall also be interpreted to include the plural and vice versa, and where we have used the masculine phrase it shall include the feminine and vice versa. Any reference to a person includes an individual, a company, a partnership or any other form of organisation. 1.7 We have used headings in these conditions for your and our convenience but those headings are not intended to have any effect on the interpretation given to the wording of the conditions themselves. 1.8 If there is any inconsistency between the terms of these conditions, the offer and the mortgage deed then the terms of these documents shall have the following priority (1) the mortgage deed, (2) the offer (3) these conditions. 1.9 We shall always exercise our rights under these conditions in a reasonable way. Each of these conditions shall be read as if it said that we will exercise any rights that we have in the condition reasonably even if it does not expressly say that. 2. What the mortgage covers 2.1 The mortgage deed is our security for the repayment in full of the mortgage debt (which includes any further advance that we may make to you) as well as any other money that you come to owe to us in connection with the property or any other mortgage you have with us. For the avoidance of doubt the mortgage does not secure any money which we have, or will, lend to you under the Consumer Credit Act 1974, for example, a personal loan. 2.2 For the avoidance of doubt where we are under any obligation to release part of the original loan or any further advance as an instalment, or if you are entitled to make a withdrawal under condition 5, such a release, instalment or withdrawal will be covered by the mortgage deed. 2.3 Remember that if there is more than one borrower you are all responsible for complying with the obligations under all of these conditions. 4

6 3. Your monthly payments 3.1 As a condition of our agreeing to pay the loan, or any part of it (and where relevant any further advance) to you or as you otherwise request you agree to repay to us the mortgage debt, to pay interest and any other amount you come to owe us under the mortgage. You agree to pay to us your monthly payments on the payment date. You will continue to make the monthly payments during the mortgage term until the mortgage debt is fully repaid to us. 3.2 You agree to make your monthly payment by whatever reasonable method we notify to you. Where your monthly payment will be collected by direct debit from a bank account you agree that you will not cancel that direct debit without our prior permission. In addition to collecting your monthly payment we can also use your direct debit to collect any expenses that you owe to us. The recovery of our expenses from you is covered in more detail in condition We can reasonably change the way that you pay your monthly payment to us if: we think that it is necessary to ensure that your monthly payment reaches us on time; or we believe that a change is necessary to allow us to comply with any law, rule or regulation or the decision of a court of law or ombudsman (such as the financial services ombudsman) or similar official; such a change is necessary to bring the way you pay your monthly payment in line with our computer systems or to bring your payments into line with the way other customers of ours make their monthly payments; and whatever the reason for the change to your payment method we will give you at least 30 days prior notice of any such change to the way that you pay your monthly payment by any of the means set out in condition It is important that your monthly payment reaches us by the payment date. If you fail to make your monthly payment by the payment date this will be a breach of these conditions and we may take action against you, including the steps set out in condition 17. If we are unable to collect your monthly payment because, for example, the direct debit or your cheque is refused by your bank or building society then we may charge you a fee for each time that the direct debit or cheque is refused, in respect of our administration costs. 3.5 If you pay only part of your monthly payment in any month we can decide which part of the mortgage debt we will reduce by the amount we receive. 3.6 You will only have made your monthly payment when we receive the amount of your monthly payment in full in cleared funds. 3.7 If you have an interest only arrangement we will apply your monthly payment in repayment only of the interest arising on the loan, and the original amount of the loan shall be repayable to us at the end of the mortgage term. 3.8 Where set out in the offer, and providing you comply with all of the conditions of that offer, we will allow you to repay the loan and all interest arising on the loan in one single payment at the end of the mortgage term (unless some other period is set out in the offer). At the end of each 12 months of the mortgage term, the interest due during that year will be added to the amount of the mortgage debt and will itself then attract interest. 5

7 3.9 If the offer is for a flexible mortgage then the following shall apply: you must pay your monthly payment on the payment date unless you have exercised your right to take a payment holiday; you may make overpayments by paying us lump sums or by asking us to collect more than the normal monthly payment (if you pay your monthly payment by direct debit) but you must use our standard overpayment/withdrawal form(s) which are available on request. 4. Changes to your monthly payment and the interest period 4.1 During the mortgage term circumstances may arise when we will need to change either the amount of your monthly payment in order to ensure that the mortgage debt will be repaid in full by the end of the mortgage term, and/or we may change your payment date. 4.2 We can change the amount of your monthly payment: if there has been a change to the interest rate, although we shall not be obliged to change the monthly payment at the same time as the interest rate changes; or if a special rate has been applied to your loan, which has ended for any reason; if any interest only arrangement ends or is amended we will need to amend your monthly payment to ensure that at the end of the mortgage term your mortgage debt will be repaid to us in full; if there has been a change to the mortgage term or to the interest period; to reflect a change to the amount of the mortgage debt, perhaps because you have taken out a further advance; if we think that a change is reasonably necessary to ensure that the mortgage debt will be repaid in full by the end of the mortgage term; and if you ask us, and we agree, to change the interest we charge you. 4.3 If we change the amount of your monthly payment this will not mean that we have either waived or rescheduled the mortgage debt. This means that if you are in arrears with your monthly payments, or owe us any other money at the time we change your monthly payment we can still require you to repay those arrears or other amounts. 4.4 We can change the payment date if we consider it reasonably necessary, providing that we give you at least one months notice of the new payment date by any one or more of the methods set out in condition Except where the mortgage is linked to LIBOR (where your payments are linked by the way the interest is calculated to the penultimate business day of each month) you may request a change in the payment date by sending to us a signed request. Your request must reach us at least 21 days before the next payment date. Your new payment date must be between the first and the twenty-eighth day of the month and the change must not result in any monthly payment being missed. We will make the requested change with effect from the month following the month in which your request is received 6

8 by us. A one-off interest adjustment will be made at the time of the first payment on the new payment date. You can only change the payment date once in any six month period unless we give you permission to make a further change. 4.6 We can reasonably change the interest period by giving you at least 30 days notice for any of the following reasons:- 5. Flexible mortgages to accommodate any changes in technology; to reflect the interest period we apply to other mortgages; to reflect any changes necessary to allow us to comply with any law, rule or regulation or the decision of a court of law or ombudsman (such as the financial services ombudsman) or similar official; if we transfer your mortgage under condition 20 to another person or, if any person is proposing to take over our business or if we are proposing to take over the business of another person, we may make changes necessary to bring the interest period into line with the interest period of the mortgages of the other person; to reflect a general change in the practice of other mortgage lenders. 5.1 Where your mortgage is stated to be a flexible mortgage in the offer the following conditions apply: all overpayments will be used by us to reduce the mortgage debt; you can take a payment holiday only if the withdrawal limit is more than the monthly payment; if you want to take a payment holiday you must give us at least 21 days notice before the relevant payment date. You must use our standard payment holiday form(s) which are available from us on request. You may apply to take either of the following types of payment holiday:- (a) you may ask us to spread your monthly payments over the remaining months of that year, for example if you wish to take a 3 month payment holiday we will divide your total monthly payments for the year by 9, instead of 12; or (b) you may ask us to deduct the amount you will not be paying to us during the payment holiday from your withdrawal limit; and we will consider your request and will promptly inform you if your request for a payment holiday has been accepted. If we do not agree to your request we will set out our reasons and if appropriate set out any alternative we are prepared to offer you if you want to make a withdrawal this must be of a minimum of 1,000 and we will pay this amount to you by cheque. You can only make one withdrawal per month. 5.2 We can withdraw your right to take a payment holiday or to make a withdrawal if:- 7

9 5.2.1 you miss a monthly payment without our permission; if any of the events in condition 16 occur which entitle us to demand the immediate repayment of the mortgage debt; or if we give you 30 days written notice. If the right to take a payment holiday or to make a withdrawal is removed under condition or if you make full monthly payments for at least six months in a row your right will be reinstated. 6. Repayment of the mortgage debt in full 6.1 You agree to repay the mortgage debt to us in full at the end of the mortgage term (although you may repay the mortgage debt earlier, see condition 9). 6.2 If: at the end of the mortgage term:- (a) your final monthly payment; (b) the proceeds of your investment policy; or where we have taken possession of your property under condition 17, the proceeds of sale of the property are insufficient to repay the mortgage debt in full you will pay us any shortfall immediately, and we shall be entitled to charge interest on any such shortfall until the outstanding money has been paid in full, both before and after any court order we may obtain against you. 6.3 If we have released the mortgage deed you will still be liable to pay any outstanding amount owed to us, even if we have made a mistake in telling you the amount you owe. If you believe that a mistake has been made by us you agree to inform us as soon as is reasonably possible after you discover the mistake. 7. Your mortgage account 7.1 We can open a new mortgage account for you if this helps us to administer your mortgage. We may open a new mortgage account and divide your mortgage debt between more than one account if different parts of the mortgage debt are subject to different interest rates and/or different interest periods (for example if we make a further advance). 7.2 If we have divided your mortgage debt into different parts either within one mortgage account or between more than one, we will add any expenses to the mortgage account or part of the mortgage account that the expense most closely relates to. 7.3 You authorise us to transfer money from any other account you have with us to pay any amount that you owe to us under your mortgage which remains unpaid. We will only exercise our rights under this condition if you have previously failed to pay us the amount you owe when requested. We will write to you at the address we hold for you at least 14 days in advance giving details of the accounts and sums that we intend to transfer and when. 7.4 Any payment you make to us will be deemed to only have been received by us when we have received cleared funds. 8

10 8. Interest 8.1 General Details of how the interest will be charged are also set out in the offer If you fail to pay the interest when it is due, we may (either at that time or any time thereafter in accordance with our normal practice) add the unpaid interest to the amount of the loan that is unpaid and therefore the unpaid interest becomes subject to interest itself Interest may be charged either in advance or in arrears according to our policy from time to time In addition to the payments made under condition 3.1 and unless otherwise agreed by us you will, before the end of the first calendar year during which any part of the loan is advanced to you and before the end of any calendar year during which a further advance is made, pay to us the amount by which the interest due to accrue in any such year exceeds the interest to be paid as part of the monthly payments in that year We may from time to time reduce the interest rate and we may notify you of the change of interest rate by any of the methods set out in condition 21. For the avoidance of doubt the interest rate will never be less than 2% We may change the standard rate by giving you notice at any time for any of the following reasons:- (a) to reflect changes in our costs in lending you the loan; or (b) to maintain the competitiveness of our business, for example to take into account changes in market conditions including rates charged by other major mortgage lenders; or (c) to ensure that our business is operated in a prudent way; or (d) to take account of any change in the law or regulatory practice relating either to us specifically or to mortgage lenders generally Any margin that applies to the loan will stay the same for the whole of the mortgage term Unless we have agreed a special rate in the offer, we may reasonably change the interest rate at our discretion We can record interest on your mortgage account on the first or any subsequent day in each year Where the mortgage debt is made up of separate loans and further advances, each or any of them may attract a different interest rate as set out in the relevant offer. If different parts of the mortgage debt carry different interest rates then the mortgage debt will be divided for ease of administration into a separate part of the whole mortgage debt, and such a part shall be called a sub-account, and for ease of reference will be given a number. Each sub-account will carry interest at the relevant interest rate specified in the relevant offer and the interest will otherwise be charged in accordance with these conditions. Our right to set-off money you owe to us is not affected by this condition. We may apply any payments you make to the mortgage debt in such order as we reasonably think fit and this 9

11 includes our selection of the sub-account or sub-accounts as may in our reasonable opinion be appropriate. 8.2 If your mortgage is linked to LIBOR Where in the offer we have agreed that your mortgage will be set by reference to the LIBOR rate, the interest rate will change to reflect any changes to the LIBOR rate from time to time. In the case of a LIBOR linked mortgage, the following provisions will apply: The interest chargeable shall be charged at the total of:- (a) LIBOR; plus (b) any margin, on the mortgage debt for each LIBOR interest period, provided that during the first LIBOR interest period following completion, we shall calculate LIBOR by reference to the rate that applied on the immediately preceding quarter day from the date of completion until the start of the next LIBOR interest period Interest will be payable in advance on each payment date If you fail to make a repayment (including a monthly payment) or if you notify us that you wish to make an overpayment but you then do not do so, where such repayment or overpayment is made on a day other than the payment date then you will pay to us an amount equal to the amount (if any) by which the interest which would have been payable on the amount received on the payment date is more than the interest which, in our reasonable opinion, would have been payable on a deposit of an equal amount placed with a major bank in London for a period from the first business day after the late or missed payment until the next payment date and you agree to repay any other costs, liabilities or expenses reasonably incurred by us as a result of that late or missed payment. 8.3 Tracker Mortgages Where in the offer we have agreed that your mortgage will be set by reference to the tracker rate the interest rate will change to reflect any changes to the base rate from time to time. In the case of this type of mortgage the following provisions will apply: The interest chargeable shall be charged daily at the total of:- (a) the tracker rate; plus or minus (b) the margin, on the mortgage debt calculated on either:- (a) the preceding payment date, provided that during the month following completion, we will calculate the interest from and including the date of completion up to but not including the payment date; or (b) the date of completion and thereafter recalculated on the 31 December following completion and at yearly intervals thereafter; as set out in the offer. 10

12 8.3.2 Where there is a change in the base rate (the date of such change called the change date and the revised base rate, called the new base rate ) we will on a date within 28 days of that change date (such date called the reset date ) apply to the mortgage debt the new base rate up to but not including the next reset date Interest shall be payable in advance on each payment date. 8.4 Daily Rate Mortgage If we have agreed in the offer to charge you interest on a daily basis, then the following provisions shall apply: The interest chargeable shall be charged at the total of:- (a) the standard rate; plus or minus (b) any margin, on the mortgage debt The mortgage debt shall be calculated daily provided that:- (a) where there is a withdrawal the mortgage debt shall be recalculated on the date of the withdrawal; and (b) where you have made an overpayment the mortgage debt shall be calculated on the day following receipt of such overpayment Interest shall be payable in advance on each payment date. 8.5 Annual Interest Mortgages If we have agreed in the offer that we will charge you interest on an annual basis, then the following provisions shall apply: The interest chargeable shall be charged at the total of:- (a) the standard rate; plus or minus (b) any margin, on the mortgage debt The mortgage debt shall be calculated as at the date of completion. The mortgage debt will then be recalculated on the 31 December following completion and at yearly intervals thereafter Interest shall be payable in advance on each payment date. 8.6 Special Rate If we have agreed in the offer that we will charge you interest at a special rate, then the following provisions shall apply: The interest chargeable shall be charged at the special rate on the mortgage debt The mortgage debt shall be calculated as set out in the offer Interest shall be payable in advance on each payment date. 11

13 9. Paying off your mortgage 9.1 Subject to the payment of any early repayment charge that might apply to your mortgage and our rights under condition 10, you are able to repay your mortgage debt in full at any time during the mortgage term. 9.2 If you choose to repay your mortgage debt to us before the end of the mortgage term there may be an early repayment charge for you to pay. For example if we have offered you a special rate it may have been a condition of us offering you that special rate that if you repaid the mortgage within a certain period a charge would be payable. If an early repayment charge is payable this will have been set out in the offer. 9.3 In addition to any early repayment charge mentioned in the offer, on the repayment in full of your mortgage you will be charged an administration fee for discharging the mortgage. The amount of such fee is set out in our list of fees published from time to time. 9.4 Where you repay your mortgage early we calculate the final payment necessary to repay the mortgage debt including the interest that will be due from the date of your last monthly payment to the date you intend to repay the mortgage, some people call this a redemption figure. If the date you intend to repay the mortgage changes you must contact us immediately as this may affect the final payment necessary to repay the mortgage debt. 9.5 In certain circumstances you may be able to repay part of the mortgage debt. Unless we say otherwise in the offer we will only accept part repayments towards your mortgage debt that are at least 500 or more (that is at least 500 more than the monthly payment you are required to make at the relevant time). If there is an early repayment charge which applies to the part of the mortgage debt you repay we may charge you a proportion of the relevant early repayment charge. If we do this, you will have to pay us the rest of that early repayment charge if you make any further repayments (other than your normal monthly payment) for that part of your mortgage debt that the early repayment charge relates to. 9.6 If you have repaid part of your mortgage debt by making an overpayment when we recalculate the interest we will charge you for the rest of the mortgage term we will give you credit for the amount of the part payment you made. This credit will be calculated for the number of days left in the relevant interest period from the date on which we received your part payment. 9.7 If there is a partial repayment of your mortgage debt, other than an overpayment under a flexible mortgage under condition 5, you will not be entitled to have it back. 10. If you owe us money on another mortgage If you owe us money under any other mortgage (whether that mortgage was in your name alone or jointly with another person) we will not release this mortgage until the money you owe us from the other mortgage has also been repaid in full. 11. Our release of the loan or further advance in instalments In some cases we may put in the offer of the loan, or offer of any further advance, that we will let you have the money in instalments. This might be the case for example where we require, or agree for you to undertake some work to the property. We will only have to make those instalment payments when we are reasonably satisfied that you have complied with all the conditions we set out for release of that instalment. 12

14 12. Your assurances to us 12.1 It is a condition of our lending you the loan and our accepting the mortgage deed for securing repayment of the mortgage debt that: you are not in breach of any agreement or contract to which you are a party to which you might reasonably have been expected to know would lead us to believe would have an adverse effect on your ability to perform your obligations under the mortgage (remember this includes these conditions, and the terms of your offer), and in particular your ability to repay the mortgage debt in full at the end of the mortgage term; as far as you are aware no one has brought, or is about to bring, legal proceedings against you, whether in a court of law or other similar body, which you might reasonably have been expected to know would lead us to believe would have an adverse effect on your ability to perform your obligations under the mortgage; and to the best of your knowledge the information that you have given to us is true and accurate and that you have not failed to tell us of something which you might reasonably have been expected to know would effect our decision to lend you money (or the conditions on which we would be prepared to lend you money) if you had told us (including the matters referred to in conditions and ) Your obligation to us under condition 12.1 is a continuing obligation. This means that the statements above must be true at the time you apply for the relevant loan and at all times after completion. If at any time anything changes you must tell us. 13. Your obligations for the property 13.1 You agree that until your mortgage deed is released by us you will: keep the property in a good state of repair and whenever necessary carry out repairs to the property; allow us (including anyone we choose to represent us) to have reasonable access to the property to check the condition of the property, to revalue the property or for any other reasonable purpose in connection with the mortgage. If you have not complied with your obligations under the mortgage we (or persons we appoint) will have the right to access the property to carry out those obligations on your behalf (for the avoidance of doubt if we chose to exercise this right we will act reasonably and we shall not be considered to be a mortgagee in possession); comply with any obligations you have to third parties in relation to the property. For example if you only own the leasehold you must promptly pay any charges or rents to your landlord. This obligation will also include any taxes you have to pay in relation to the property, such as stamp duty; fully comply with any conditions or restrictions that apply to the property. For example if the property is leased to you then you will have obligations and restrictions on how you use the property set by your landlord and you agree with us that you will fully comply with them; comply with any legal requirements that affect the property including its use, as well as proper requirements and regulations of your local authority, including your local planning authority; 13

15 comply with all of the conditions in the offer including any special conditions that require you to carry out any repairs or building works to the property within the time limits set out in the relevant special condition; send to us a copy of any notices you receive that relate to the property no later than seven (7) days after you receive them. Such notices will include notices from your landlord (except the normal request for the payment of your rent or other sum owed), from the local planning authority and any notice threatening legal proceedings in relation to the property, for example a boundary dispute; if you acquire either an additional interest in the property or related land or buildings (which will include any extension to your lease or purchasing the freehold from your landlord) you must send us a copy of the relevant document that gives you that additional interest and, if we request, you must enter into a new mortgage deed, on terms that we approve of, which includes your newly acquired interest; and provide us with the original of any document that we may reasonably request in relation to the property. This may include any share certificate that you have for any management company that looks after the property and related land or buildings (sometimes these functions will be carried out by a residents association), and we shall be able to reasonably exercise any powers conferred by the share certificate, including the right to vote on your behalf You agree that until your mortgage is released by us you will not: change the use of the property. Unless otherwise agreed in writing by us you will only use the property for private residential purposes; sell, give away, share or otherwise give up possession of the whole or part of the property; allow any other person to be registered as an owner of the property; do anything, or fail to do anything, that would adversely affect the insurance of the property as referred to in condition 14; carry out structural alterations or additions (for example build an extension) without getting our prior permission and you must inform us as soon as possible if you intend to carry out any structural alterations to the property. You will also inform us immediately if you intend to buy or rent additional land that will connect with or otherwise be available to the owners of the property. You must also get any necessary planning permission and make sure that any building work carried out satisfies building regulations; grant or agree to grant a lease of the property or create any other kind of right over the property or any part of the property, or agree any surrender of a lease (including any lease under which the property is held) without in all cases getting our prior written permission; 13.3 If you fail to fulfil your obligations under this condition 13 we may reasonably carry them out on your behalf and the expenses we incur will form part of your mortgage debt, including any amounts we have to pay to third parties. 14

16 14. Insurance 14.1 The property must be covered by an appropriate buildings insurance policy at all times during the mortgage term You may insure the property yourself provided that: you send to us a copy of the relevant insurance policy for our approval; if we ask for it you will provide us with evidence that your premiums have been paid up to date; we must be named, and our interest in the property noted, on the insurance policy; the insurance policy must cover all risks that are normally covered by comprehensive home insurance (including public liability for any third parties whilst on the property), and must be for at least the full reinstatement value of the property (that is the costs of rebuilding the property if it were to be destroyed) and must maintain full reinstatement value for the duration of the mortgage term (that is it must be index linked so that its real value is not reduced over time because of inflation); and if you change your insurer or the type of insurance policy that you hold your new policy will still need to meet the requirements of this condition You will tell us about any claims of 5,000 or greater value, or such other sum as we may notify you of from time to time in writing, for example to increase this sum to keep pace with inflation. You will hold money that you receive from your insurers under any insurance policy taken out under condition 14.2, in trust for us. We may reasonably decide whether that money is used to either make good the loss or to reduce your mortgage debt If you do not take out the required buildings insurance, or if at any time we have reasonable grounds to believe that the insurance you hold is insufficient, we may arrange insurance on your behalf and at your expense. If we arrange the insurance whilst we will take care to ensure that such insurance is adequate for our purposes we give no assurances that the insurance will be sufficient for your purposes. If we arrange the insurance you will pay the insurance premium to us by the date we specify, and if you fail to make the payment in time we may pay the premium to the insurer on your behalf, which you will reimburse to us on demand. Until such time as you reimburse us for the premium it will form part of the mortgage debt, and will therefore be subject to interest from the date when the premium should have been paid until such date as you reimburse that premium to us. If we insure the property, we shall be entitled to keep any commission we receive from the insurance company or broker Whether or not we or you arrange the insurance of the property we shall be entitled to reasonably settle and adjust all claims in relation to the insurance of the property. 15. Investment policies 15.1 If you have selected Interest Only as your repayment method you should be aware that you will only be paying interest on this mortgage advance and that the original amount of the loan (together with any accrued or unpaid interest) will have to be repaid at the end of the mortgage term. 15

17 15.2 Where we have agreed an interest only arrangement we strongly recommend you maintain a suitable investment policy sufficient to repay the mortgage debt at the end of the mortgage term We also strongly recommend that you take out a suitable life insurance policy, equal in value to the mortgage debt, to repay the mortgage in the event that you die before the mortgage is repaid If we ask you to, either in the offer or at a later time, you will deposit the investment policy with us When you complete the mortgage deed we shall have an equitable charge over the investment policy (that is we shall have a right to the money under the investment policy). If we reasonably request you will arrange for the legal assignment (that is a legal transfer) of the investment policy to us If we reasonably request you agree to legally assign any investment policy to us and to sign any documents that we may require you to in order to carry out such an assignment. 16. When can we require you to repay the mortgage debt in full immediately? 16.1 Provided you comply with your obligations under the mortgage we will allow you to occupy the property until the mortgage debt has been repaid in full If any of the following events occur we shall be entitled to demand the immediate repayment in full of the mortgage debt: if you are in breach of your obligations under the mortgage; if the property is the subject of a compulsory purchase order; if the property is damaged to such an extent that in our reasonable opinion the reduction in value of the property is such as to affect our security; if you or the guarantor die and the mortgage debt will not be repaid in full from the proceeds of a life assurance policy; if you, or your guarantor, become bankrupt, or enter into any arrangements with your creditors or if we have reasonable grounds to believe you are unable to pay your debts; if any person brings legal proceedings against you for a court order to do with the property and in our reasonable opinion this could harm our security; if any security created by the mortgage becomes void or is no longer enforceable; if you only own the leasehold interest in the property and your landlord serves you with notice that you are in breach of the terms of your lease and either you cannot remedy that breach or you do not remedy the breach by the time specified in the notice from your landlord; if any statement made by you in your application for the loan proves to have been untrue or is misleading and is not remedied (where it is capable of being remedied) within 14 days of our requiring you to remedy the problem; 16

18 17. Our remedies if you do or say anything that reasonably leads us to believe that you no longer intend to comply with your obligations under the mortgage including if you give us possession of the property; if you fail to make any two monthly payments (whether or not the two payments are consecutive), or if you fail to make any other payment due under the mortgage within two months of the date it was due for payment; or if we serve you notice to repay the mortgage debt in full and two months have passed since the date of that notice If the mortgage debt becomes payable in full as a result of any one or more of the events set out in condition 16, or where you otherwise agree, we shall be entitled to take any one or more of the following actions: to take action (including court action) to require you to move out of the property (repossession), and to collect any rents; to sell the property or to give a person the option to buy the property (the restrictions of s103 of the Law of Property Act 1925 shall not apply (these restrictions would have applied to us had we not said that they do not)); to lease the whole or part of the property on any reasonable terms (the restrictions of s100 of the Law of Property Act 1925 shall not apply (these restrictions would have applied to us had we not said that they do not)) and to collect any rents; to appoint a person to act as the manager of the property (this person will be entitled to collect income from the property on your behalf and is called a receiver ). Although we shall appoint the receiver and settle his pay the receiver shall be your agent and you shall be responsible for his actions at all times and his expenses shall form part of the mortgage debt. The receiver will have the powers given to him under the Law of Property Act 1925 as if he had been appointed under that act and in particular, through the receiver, we shall be able to:- (a) take possession of the property; (b) carry out development of the property where such development has been approved by us; (c) employ contractors to carry out any work to the property; (d) raise money from us, or other lenders, using the property as security; (e) if the property is leasehold to vary the terms of, or surrender the lease or to take a new lease and the new lease shall be mortgaged to us on the same terms as this mortgage and the receiver can enter into the necessary legal documents to give effect to any of these things on your behalf; (f) sell, let or arrange the sale or letting of the property on such terms as he shall reasonably think fit including accepting the termination or surrender of any lease, and all of these acts shall be done by the receiver on your behalf; (g) make any arrangement or compromise that he and or we shall think fit; 17

19 18. Our expenses (h) make and effect all repairs, improvements and insurances; (i) appoint managers or agents to carry out any of his tasks; (j) do anything else that may be incidental to carrying out the above tasks Any money that the receiver collects will be applied in the following order:- (a) to pay the receiver s costs and expenses; (b) to pay off any liabilities incurred by the receiver on either your or our behalf; (c) to pay off the mortgage debt; any surplus after these matters have been taken care of will be paid to the person entitled to it (which may or may not be you) if you leave any personal possessions in the property we shall be entitled to remove and store them at your expense and sell them and if we sell those possessions we may use the money received to go towards your mortgage debt We will use any money that we receive in the following order: to pay off unpaid interest; to pay off the mortgage debt IMPORTANT: If there is more than one of you borrowing under this mortgage we can choose to take action against any of you or all of you. For example, we could seek to recover the whole of the mortgage debt from just one of you You agree to pay any expenses that we reasonably incur in connection with the property and/or your mortgage. You must pay us these expenses when we ask you to in writing and if you do not pay these expenses they will be added to the amount owing on your mortgage account It is not possible for us to list all of the expenses but all expenses must be reasonably incurred and the following are examples of the sort of expenses you may have to pay to us: the expenses we incur as a result of any legal proceedings concerning either the property or the mortgage and whether or not these legal proceedings are brought against you, by you or involve any third party (this includes our expenses incurred if you fail to make any payment when it was due to be paid, and any legal proceedings we take for repossession of the property); any administration fee we may charge you in connection with the mortgage in accordance with the list of such fees which we publish from time to time (you will be sent a copy with your annual mortgage statement or at least 30 days before any significant increase in such fees is due to take effect); any expenses that we reasonably incur as a result of any breach by you of these conditions; 18

20 any valuation expenses we reasonably incur in connection with the property; any expenses we incur in the preparation, completion and registering of the necessary documents relating to your mortgage, and of releasing the property from the mortgage when the mortgage debt has been fully repaid; any expenses in connection with taking out insurance on your behalf under condition Our costs and expenses will, if relevant, be subject to value added tax (VAT) and any other relevant tax, for example, insurance premium tax If we have to pay costs and/or expenses to any third party we will try to give you notice within a reasonable time of the costs or expenses being paid by us. Such notice will set out the nature of the service or other reason that the cost or expenses arose, the amount of the costs or expenses and when those costs or expenses were incurred. If we should at any time fail to give you such a notice this will not effect our right to recover the relevant costs or expenses from you Until you repay expenses to us in full those expenses will form part of the mortgage debt and therefore interest will be charged on them: in the case of any third party expenses they will be subject to interest from the date on which we pay them to the third party; and in the case of our own internal expenses covered by any administration fee they will be subject to interest from the date on which we charged you the administration fee. 19. You appoint us as your attorney 19.1 To secure our interest in the property you appoint us (and any receiver that we appoint under condition ) as your attorney. This means that we (or any receiver we appoint) will be legally entitled to take action and to execute documents on your behalf. Our appointment as your attorney cannot be withdrawn until the mortgage debt has been repaid in full and your mortgage has been released by us. Our rights as your attorney include: the right to put right any defect or fault in the security intended to ensure the repayment of the mortgage debt; to receive any money owed to you in connection with the property, for example, any money owed to you under any insurance policy; to exercise or transfer your rights in any management company which provides services to the property; being able to give notices to any third party, including your legal representative, to allow us to look at, and provide copies of any documents we reasonably need to see in connection with the property; and sign any documents on your behalf Where under these conditions you are required to do something, if you fail to do so, we may do it in your place as your attorney If we exercise our rights under this condition 19 to act as your attorney we will use reasonable care. 19