Guide to Mortgages

This guide helps to explain your mortgage in more detail prior to entering a contract with the Holmesdale Building Society.  It should be read in conjunction with any mortgage illustration provided to you.  If you have any questions about this information please call a member of our Mortgage Team on the number above to discuss your needs. Alternatively you can submit a general mortgage enquiry or request a call back.

Residential Products

Standard Variable Rate Mortgage:  

The interest charged on this product can vary throughout the life of the loan. You will be notified by us in writing of any change to the interest rate and advised of the new monthly repayments required to maintain the term of your mortgage.  Changes in interest rate may vary in accordance with our current Mortgage Terms & Conditions.  You may make overpayments at any time or settle this type of loan without penalty.  Any overpayments received will be applied immediately to reduce the capital amount owing to us and reduce the interest charge on your account from the day following receipt.

Fixed Rate Mortgage:  

The interest charged on this product is, as the name implies, fixed for an initial period of your loan (usually between one and five years).  At the end of the initial fixed period, your mortgage would move to our ‘Standard Variable Rate’ at that time.  We may however be able to offer you a further fixed or discounted rate period based on prevailing rates.  During the fixed rate period, if you settle your loan or make overpayments then an ‘Early Redemption Charge’ may apply.     

Discounted Mortgage:  

This product offers a discount from our Standard Variable Rate for an initial period of your loan (usually between one and five years).   At the end of the initial discounted period your mortgage would move to our ‘Standard Variable Rate’ at that time.  We may however be able to offer you a further discounted or fixed rate period based on prevailing rates.   The interest charged on this product can vary throughout the life of the loan. You will be notified by us in writing of any change to the interest rate and advised of the new monthly repayments required to maintain the term of your mortgage.  Changes in interest rate may vary in accordance with our current Mortgage Terms & Conditions.  During the ‘discounted period’, if you settle your loan or make overpayments of more than 10% of the total loan amount per annum, then an ‘Early Redemption Charge’ may apply.

Self Build Mortgage:  

This product is available to assist when you enter into a self build contract.  The total amount of the mortgage is agreed at the outset and then can be drawn in stages based on interim valuations of the completed work.  Interest is charged on an interest rate above our Standard Variable Rate until the loan is fully drawn.  During the build out phase you will be required to pay the interest charged on the amount drawn each month.  Once the self build period is completed the loan will move to a residential product (based on circumstances and product availability at the time).  During the self build period, if you settle your loan or make overpayments of more than 10% of the total loan amount per annum, then an ‘Early Redemption Charge’ may apply.  Once the self build period has ended, and the loan moved to another product, details on what Early Redemption Charges are applicable are described in the product details above

Buy to Let Products

Buy to Let Mortgage:  

This product is available if you are purchasing a property with the sole intention of letting it out under a rental agreement.  It is also available if you are re-mortgaging a rental property and either already own other properties that are rented out or, if you do not already own other properties that you are renting out, since becoming the owner (which includes inheritance for example) neither you nor your family members have lived in the property.  This product can usually be taken on either a Standard Variable Rate or a Fixed Rate basis.  The way that interest is charged, whether ‘Overpayments’ are allowed or ‘Early Redemption Charges’ apply are described in the product details above.  Our affordability assessment will be based upon the letting income you obtain.   

Consumer Buy to Let Mortgage:  

This product is available if you are re-mortgaging a property that you or an immediate family member has previously lived in and you do not own other properties that are being let.  This product can usually be taken on either a Standard Variable Rate or a Fixed Rate basis.  The way that interest is charged, whether ‘Overpayments’ are allowed or ‘Early Redemption Charges’ apply are described in the product details above.  Our affordability assessment will be based upon your income supplemented by any letting income you obtain. 

The interest charged on our Buy to Let products may be on a discounted rate or charged on an interest rate above our Standard Variable Rate.  The interest charged on this loan may vary throughout the life of the loan. You will be notified by us in writing of any change to the interest rate and advised of the new monthly repayments required to maintain the term of your mortgage.

Methods of Repayment

Capital and Interest Mortgages:

With this type of mortgage you repay part of the capital each month plus interest on the outstanding amount over an agreed number of years, so that at the end of the term your mortgage is repaid in full.  If interest rates remain the same over the life of the mortgage, the percentage of your repayment applied to the capital sum borrowed gradually increases as the total amount of interest actually charged on the reducing balance becomes less each year.  The Society usually offers this type of loan on all of its products.

Interest only Mortgages:

With this type of mortgage you repay the capital at the end of an agreed term.  You will have to agree with us at the outset how this will be achieved.  We will charge interest on the capital balance owed to us.  Your monthly repayments to us will only be for interest and therefore it is important to remember that the value of the proposed repayment vehicle will have to be maintained by you (this may require additional monthly costs to a third party) so that it has sufficient value to clear your mortgage at the end of the agreed term.  To allow you to maintain a regular monthly payment, any shortfall or surplus created by the differing number of days in each calendar month will be added or deducted, as appropriate, from the capital sum owing to the Society.  The Society usually offers this type of loan on all its products.  We can only provide this facility where we are satisfied that the value of the repayment vehicle will reasonably be expected to repay the mortgage at or before the end of the term.

How We Work Out Our Interest Charges

Our Illustration contains details of the annual percentage rate of charge (APRC) which is the total cost of the loan expressed as an annual percentage to help you compare different mortgage products.  Our interest calculation is based on the daily balance of your mortgage and applied to your account monthly.  This means that from the day following receipt of any repayments from you, the amount of the loan on which interest is charged will be reduced.

Credit History

Customers with Impaired Credit History:

We may still be able to provide a mortgage to you even if you have poor credit history.  The rates applied initially to your loan will reflect the additional perceived risk to us.  Loans can usually be provided on either a Variable Rate or Fixed Rate basis.

Key Facts Illustration Guide

Section 1:

This section outlines why we provide you with the illustration and how to compare illustrations from other lenders. 

Section 2:

This section tells you about the level of service you have received in receiving this illustration.

Section 3:

This section outlines key information about the illustration.  It confirms what you have told us, the amount of the mortgage, if any fees have been added, your estimated valuation of the property to be mortgaged, the term of the mortgage and the method of repayment. 

Section 4:

This section explains that Holmesdale Building Society will provide the mortgage.  It also confirms the type of mortgage loan (Product Description) being illustrated and rate of interest charged by the Society.

The interest rate is the initial rate of interest payable.  This section also explains the term of any initial rate and the name of our mortgage product

Section 5:

This section outlines the overall cost of the mortgage.  It tells you the total cost of the mortgage you will repay over the full term.  It also outlines the amount you will repay for every £1 and the APRC for comparison purposes.  It also includes a second APRC figure which has been introduced to show you what the interest rate and repayments could be, based on the highest rate of interest from the last 20 years.

Section 6:

This section tells you the cost of your mortgage payment each month.  Unless the mortgage is charged on a fixed rate basis then this cost could vary if interest rates change.  You will be advised of any change to your interest rate (where applicable) if the Society changes its variable rate products.

Section 7:

This section outlines the risks attached to your mortgage. It gives you an indication of how your mortgage payment will increase should interest rates rise by 1% and will tell you if the interest rate on this loan can change. The section also outlines the mortgage commitment is still payable should your income reduce.

As this mortgage is secured against the property, if you are unable to meet your mortgage payments it could result in the loss of your property. Be sure you fully understand the risks before entering into this mortgage contract.

Section 8:

This section outlines any fees you must pay as part of this mortgage.  It will provide the amount of the fee, when the fee is to be paid, if the fee is refundable and if the fee has been added to the mortgage.  Please note that where fees are payable they have been included within the APRC calculation.  For specific questions on any fee please refer to the contact details on the final page of the illustration.

Section 9:

This section confirms that you don’t have to take any insurance with ourselves to receive the mortgage, and confirms any insurance which you are required to take out independently, e.g. buildings insurance.

Section 10:

This section outlines any early repayment charges you will need to pay should you wish to redeem the mortgage early.  An early repayment charge may be payable if you redeem either a ‘Fixed Rate’ or ‘Discounted Rate’ mortgage during the Fixed or Discounted period.   This also applies to our ‘Self Build’ product range

Section 11:

This section confirms you can make overpayments against your mortgage by up to 10% of the loan amount each year without receiving early repayment charges detailed in section 10 above.  If your mortgage is a Standard Variable Rate mortgage, or the Fixed or Discounted period on your mortgage has ended, you may make overpayments without restriction at any time.

Section 12:

This section outlines any additional features with your mortgage.  Please refer to the contact details on the final page of the Key Facts Illustration if you have any specific question about these additional features

Section 13:

This section gives contact details for the Money Advice Service should you wish to obtain additional information.