M O R T G A G E S E R V I C E S A borrower s guide

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1 M O R T G A G E S E R V I C E S A borrower s guide

2 For most of us, house purchase is our largest financial transaction and the associated mortgage the biggest financial commitment. Repayment of the mortgage impacts significantly on our monthly budget and has a lasting effect on our financial well-being. With many different product terms, repayment options and special interest rates available, it is important to make the right mortgage choice. Whether you are a first-time buyer or an experienced homebuyer, either moving house or considering a remortgage, National Counties Building Society can help. This leaflet introduces the Society and its mortgage service, explains the different types of mortgage and various technical terms, summarises the key stages of a mortgage application through to completion and describes the administration of the mortgage after release of funds. You are invited to read it and retain it for future reference. why choose National Counties? National Counties has been established for over 100 years. Based in Epsom, Surrey, we provide loans to thousands of borrowers across England and Wales. The efficiency of our operation means we can offer very competitive mortgage terms, backed by a first class, personal service. An internal complaints procedure has been established by the Society to deal with any lapses in service standards, with ultimate recourse for dissatisfied customers to the Financial Ombudsman Service. We endeavour to maintain our mortgage products competitive against those of other lenders. We offer a variety of mortgage products, such as fixed, capped, discounted and tracker rates to different types of borrowers including first time buyers. Full details of any products currently available can be obtained by contacting our Customer Centre or by visiting our website where you are also able to select a mortgage product and then proceed to apply online. Financial Conduct Authority The Financial Conduct Authority (FCA) is responsible for mortgage regulation, the rules of which cover the way mortgages are advertised, sold and administered. We are authorised to arrange regulated loans and our approach is to provide you with information only (advice is not given) on the mortgage products we have on offer so that you are able to choose which one suits you best. purchasing a property We provide loans for residential property purchase, with most types of property acceptable; e.g. flats, maisonettes, bungalows and houses. Contact with us at an early stage is advisable, since not only will you be given guidance as to the loan you can afford, but also it will enable preliminary enquiries to be undertaken to save time later. We will also be able to provide you with an Agreement In Principle (AIP) which can come in useful when dealing with estate agents. This might be the difference between buying and losing the property you have set your heart on.

3 remortgaging We also provide funds, if you already own your own property but would like to transfer your mortgage with another lender to us. This can involve the raising of additional funds, either to improve the property or to raise capital. If you do not have any loans outstanding on the property, you may still remortgage to raise funds for any purpose. how much can I borrow? As a rough guide we will lend up to three and a half times the combined basic income, with allowance being made for overtime and any bonuses. Due to the variety of income multiples we use to calculate a loan we have made available a more detailed income multiple table which can be located on our website along with our basic lending criteria. This table is intended as a guide only. However, we pride ourselves in the personal attention given to each borrower, to ensure that we can assist as much as possible without causing finances to be overstretched. The maximum we will usually lend is 75% of the lower of the purchase price or property value (75% Loan to Value or LTV), as determined by a professional valuer appointed by us. This may vary depending on the product terms selected. Please refer to our product summary for further details. mortgage types The majority of our mortgages are subject to variable interest rates. Our Standard Mortgage has interest re-calculated annually and lump sum (capital) repayments are accepted at any time. Capital repayments reduce the interest charged from the day following receipt and enable borrowers to shorten the term remaining on their loan or alternatively reduce their monthly outgoings. Overpayments up to 500 may be made occasionally or on a regular basis, either to shorten the mortgage term or to allow for reduced monthly payments. Sometimes initial discounts are offered against the Standard Variable Rate (SVR) or Bank of England Bank Rate for a specified period from completion. A discounted rate mortgage assists borrowers by reducing the repayments required for a time, which can be particularly helpful when a mortgage is first completed since there are usually many other items of expenditure at this stage. Fixed rate mortgages have become more popular in recent years as borrowers have sought to fix their repayments for a period, irrespective of general economic changes. A fixed monthly payment helps borrowers with their budgeting and can save money, depending, of course, on changes to interest rates during the period whilst their rates are fixed. This period can vary from 1 year to 25 years, although 3 and 5 years are the most commonly available ones. A capped mortgage is a variation of a variable rate mortgage product, where the rate is guaranteed not to rise above the cap but will reduce if interest rates fall during the cap period. A further refinement of this product is the cap & collar mortgage where in addition to the cap, there is a collar, below which the rate will not be reduced during the product period.

4 repayment methods and the mortgage term There are two basic repayment methods, Repayment (Capital and Interest) and Interest Only. A repayment mortgage is where your monthly payment includes a repayment of capital borrowed and an amount for the interest charged. Provided the correct monthly repayments are made on their due dates, this type of mortgage guarantees to repay the total mortgage debt at the end of the mortgage term. An interest only mortgage means that the monthly payments made to us cover only the interest charged so the amount you owe remains constant and does not reduce. If you have such a mortgage, the onus is on you to arrange how to repay the capital at the end of the mortgage term. Most borrowers with these types of loan take out some kind of long-term savings plan, e.g. an endowment policy, savings account, pension plan or use the disposal of assets, including the property, to repay the loan. Due to the variety of repayment options for interest only loans, it is advisable to seek specialist advice if this method is adopted. Should you fail to properly plan for repayment of the loan, or regularly check the adequacy of the arrangements you have in place, you might be faced with having to sell the property in order to repay the loan at the end of the term. You may select the term of the mortgage to suit your personal circumstances, subject to a minimum of 5 years and a maximum of 40 years (the term should not normally extend beyond your retirement age, where it does, you will need to explain how the Mortgage will continue to be affordable in retirement). If the property is leasehold, at least 70 years must remain unexpired on the lease at the outset of the mortgage. repayments We collect the monthly payments either by direct debit from your bank or by internal transfer from a savings account you may have with the Society. Payments commence one month after completion of the loan. We will deal sympathetically with any borrower who encounters difficulties in maintaining payments and temporary concessions may be allowed and arrangements entered into for the subsequent clearance of arrears, within a reasonable period. However, we must remain mindful of our responsibilities towards our other customers and if you do not maintain the repayments you are required to make we may commence legal action to recover the monies owed to us. This may be ultimately from the proceeds of the sale of the property, having obtained possession of it from you. Obviously this is a final resort and you are encouraged to contact us immediately should you encounter any problems regarding payments. Please remember that in the case of a joint mortgage all borrowers are responsible for maintaining payments, an important issue in the event of a relationship breakdown. We reserve the right to levy administration charges against accounts in arrears as detailed on our current tariff of mortgage charges.

5 home insurance and income protection Home Insurance You will naturally want to make sure that your home is covered in the event of damage due to fire, storm, flood etc. and since the property is our security for the loan, we will want it to be adequately insured. You will be given the opportunity to apply for the buildings insurance cover we are able to offer through a major insurance broker which provides comprehensive cover at competitive premium rates, with a range of discounts and payment choices. If you wish to make your own insurance arrangements instead, that is acceptable subject to certain minimum requirements regarding the risks included and the amount of cover being met. There is an administration charge associated with our initial review of insurance cover that you arrange. Combined cover for the contents of your property can also be arranged through our home insurance supplier. Income Protection A mortgage is one of the largest single transactions you will undertake and it is recommended that protection for you and your dependants is considered. This may take the form of either income protection or life cover. Income protection provides a monthly benefit so that in the event you are unable to work due to accident, sickness or involuntary unemployment you can cover a proportion of your income to help you with your monthly outgoings such as your mortgage repayments. Appropriate life insurance cover can be effected which will protect your dependants and fully repay the mortgage. You will have the opportunity to discuss your income protection and life insurance requirements with our partnership companies. interest charging On our monthly rest products we charge interest on the amount outstanding calculated when the loan is made to the end of the month and thereafter at each month end. Interest is rebated from the day payments are received to the end of the month. On our annual rest products we charge interest on the amount outstanding, calculated when the loan is made and thereafter on each 31 December. You will be asked to pay, with your first monthly instalment, the interest arising from completion up to the month end. This reduces any build-up over the mortgage term of accrued interest, being interest charged on interest unpaid. further advances Subject to satisfactory maintenance of your mortgage and the property value being adequate, additional borrowing may be requested for any purpose. The minimum loan amount we will consider is 2,000 provided this does not take the total outstanding borrowing above our maximum loan to value (LTV) limit of 75% (the LTV may vary depending on the product selected). Examples of improvements are double glazing, an extension and a new kitchen. Capital raising loans may be used for any purchase, from a new car to a holiday, school fees to a wedding.

6 early repayment Early repayment is allowed but if the loan is repaid in full, or in part by a capital repayment (minimum 500) either whilst discounted, capped or fixed rate product terms apply, or within the first three years of a loan completed on specially agreed terms, additional charges may be incurred. Details of any early repayment charges applying to a particular mortgage product will be advised to you when you first apply for the loan. services for existing borrowers Your mortgage account is administered by our Member Accounts department at our Epsom Principal Office and they will deal with any matters that may arise following completion of the loan, e.g. changes to mortgage type, releases of part of the security, addition or release of borrowers, etc. If any changes are made to the account following completion an administration charge may be levied. how to apply for a National Counties mortgage Applying for a mortgage with National Counties Building Society is easy. If you have access to the internet you may visit our website ( and apply online. This facility will not only allow you to apply online you can also track the progress of your application. Once registered you can calculate how much you can borrow and receive an instant Agreement in Principle. Alternatively you may telephone our Customer Centre on (or for intermediaries) and discuss the application with a Customer Representative. When you decide which type of mortgage you will be applying for we will provide you with a more specific product guide or summary and an illustration based upon the mortgage you require. These should be read in conjunction with this Guide to fully understand the product terms which you are applying for. Our Customer Representatives will continue to provide you with information and be your contact throughout the process of your application. In order to comply with anti-money laundering legislation we must satisfy ourselves as to your identity and residence at the time of application. To check your identity we will make searches about you at a credit reference agency that will supply us with information, including details from the Electoral Register. If we are unable to verify your identity by this method we will advise you of the additional documentation we require before we can complete your mortgage application. We will also make credit search enquiries via recognised agencies to confirm that you have maintained other financial commitments you have had in the past. For us to process your application we normally require a fee to cover our administration costs and those of the valuer for carrying out the valuation for mortgage purposes. There is a sliding valuation fee scale which is determined by the value of the property. If the application is submitted under one of our special fees assisted remortgage products, the standard processing charge is waived and a reservation fee charged. This is not refunded if the mortgage does not proceed to completion. These products also include help with the cost of standard remortgage legal fees. For all mortgage products there will also be a completion fee which may be added to the mortgage amount subject to the maximum loan to value not being exceeded. In addition to the above, there will be various legal costs associated with house purchase, remortgage and further advance loans, e.g. stamp duty, estate agents fees, etc. You should ask your legal representative for further details. Borrowers must be aged 18 years or over. Loans are subject to valuation and status. Security will be required for the loan. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Principal Office: Ebbisham House, 30 Church Street, Epsom, Surrey KT17 4NL. Tel: Fax: customer.centre@ncbs.co.uk website: Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Firm Reference No L/073/0314/MKTG