Our Mortgages - Harpenden Building Society

Our Mortgages explained

A mortgage is a loan obtained by using a property as the security for it. Borrowing from a lender to purchase a property is a major financial commitment and a milestone in life and we are here to help make the process as simple as possible for you.

There are many different types of mortgage products in the market place and you need to ensure that you choose the right product and rate to suit your requirements.

We currently offer the following mortgage products:

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 30 days in advance 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 paying early repayment charges. Any overpayments received will be applied immediately to reduce the capital amount owing to us and will reduce the interest charge on your account from the day following receipt.

Discounted Mortgage

This product offers a discount from our Standard Variable Rate for the period stated in the illustration. At the end of the initial discounted period your mortgage would move to our ‘Standard Variable Rate’ at that time. The interest charged on this product can vary throughout the life of the loan. You will be notified by us in writing 30 days in advance 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.

Some products may be subject to Early Repayment Charges. Please refer to the ‘Early Repayment Charges (ERCs)’ section below and your Key Facts Illustration (KFI) document for full details.

Fixed Rate Mortgage

The interest charged on this product is, as the name implies, fixed for an initial period of your mortgage. E.g. 1 year, after which it will revert to the Society’s standard variable rate (SVR). (It should be noted that the Society only offers a 1 year fixed rate on Bridging loans). You may make overpayments at any time or settle this type of loan without paying early repayment charges. Any overpayments received will be applied immediately to reduce the capital amount owing to us and will reduce the interest charge on your account from the day following receipt.

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 for business purposes. It is also available if you are re-mortgaging a rental property and either already own other properties that are rented out. This product can usually be taken on either a Standard Variable Rate or a discounted rate basis. Our affordability assessment will be based upon the letting income supplemented by other sources of income you obtain.

Some products may be subject to Early Repayment Charges. Please refer to the ‘Early Repayment Charges (ERCs)’ section below and your Key Facts Illustration (KFI) document for full details.

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, you inherited, 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 Discounted Rate basis. Our affordability assessment will be based upon your income supplemented by any letting income you obtain.

Some products may be subject to Early Repayment Charges. Please refer to the ‘Early Repayment Charges (ERCs)’ section below and your Key Facts Illustration (KFI) document for full details.

Early Repayment Charges

Harpenden Building Society products with Early Repayment Charges (ERCs) – An Early Repayment Charge of 2% of the outstanding capital balance will be payable should the mortgage be redeemed in full within the initial discount period. For capital repayments there is a maximum allowance per 12 month period of 10% of the outstanding capital balance. Any capital repayments over 10% will be subject to a 2% Early Repayment Charge until the end of the initial discount period. No Early Repayment Charges will be payable on redemption or for capital repayments once the initial discount period has come to an end.

Harpenden Building Society products with no Early Repayment Charges (ERCs) - You may make overpayments at any time or settle this type of loan without paying early repayment charges.

Any overpayments received will be applied immediately to reduce the capital amount owing to us and will reduce the interest charge on your account from the day following receipt.

Representative Example

A representative example of our Family Residential product can be found below:

Residential

A capital and interest mortgage of £240,000 payable over 10 years on our Standard Variable Rate at 4.19% would require 120 monthly payments of £2,451.61.

The total amount payable would be £297,578.20 made up of the loan amount plus interest (£54,193.68), an arrangement fee of £2,400, an Administration fee of £25.00, a Valuation fee of £475.00 (property value £664,000), Legal Fees of £360.00, a Redemption fee of £75.00 and a Deeds Release Fee of £50.00.

The overall cost for comparison is 4.6% APRC

It should be noted compliance with the mortgage contract does not ensure repayment of the total amount of credit.

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 A higher proportion of the capital will be outstanding at the beginning of the mortgage, the interest part of the mortgage will be higher at the outset than it is in later years. As the mortgage term progresses and the amount of capital outstanding begins to decrease, the proportion of the monthly repayment representing the interest decreases. This means that as the term progresses on a capital repayment mortgage the sum paid each month towards the capital becomes greater and the amount towards the interest reduces.

The Society usually offers this type of loan on a Standard Variable or Discounted Rate basis.

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. We can only provide this facility where we are satisfied that the value of the repayment vehicle will reasonable be expected to repay the mortgage at or before the end of the term.

The Society usually offers this type of loan on either a Standard Variable, Discounted Rate basis and Fixed Rate basis.

Part Capital and Part Interest Mortgages

Part & Part Mortgages are a combination of 2 different repayment types (1) Repayment (where you re-pay both the capital and interest elements of your mortgage in full). (2) Interest only (where you only re-pay the interest element of your mortgage and the capital balance remains outstanding at the end of your mortgage term).

With a combination of the two, you repay the full interest element and a percentage of the capital balance. The remaining capital balance will be outstanding at the end of the agreed term. For this outstanding balance, as with Interest only, you will need to ensure you have a satisfactory repayment strategy in place.

For example:

If you have a £100,000 mortgage with 50% on Interest Only and 50% on Repayment (Capital & Interest) at the end of mortgage term you will have re-paid £50,000 with £50,000 remaining outstanding.

The higher the percentage set on Interest only, the higher the balance outstanding will be at the end of the mortgage term.

The Society usually offers this type of loan on either a Standard Variable or Discounted Rate basis.

How we work out our Interest charges

For all of our products you will receive an illustration which 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 is calculated on the daily changing balance of your mortgage and applied to your account monthly. This means that from the following receipt of any repayments from you the amount of the loan on which interest is charged will be reduced.

Other General Mortgage Information

We offer mortgages for a range of purposes to include residential purchase, re-mortgage and equity release for owner occupation consumer and buy to let, holiday homes bridging and residential development and lifetime.

Mortgage products are regulated by the financial conduct authority except second/holiday homes, buy-to- let, residential development, where the borrower does not reside on site during the development period) and lifetime mortgages.

Mortgages are available of periods ranging from 1 to 35 years dependent upon the product selected.

Mortgages are repaid on a monthly basis, with 12 payments annually. The number and amount of repayments will depend on the mortgage amount and term required.

We accept security comprising 1st legal charge over properties in England and Wales only.

You will be required to arrange buildings Insurance cover in respect of the property offered as security as a condition of the mortgage offer. We will ask the valuer inspecting your property to advise us of the buildings reinstatement value. We will expect that you provide us with evidence of insurance in the buildings reinstatement value and for the interest of Harpenden Building Society to be noted in the insurance policy document before we advance any monies to you under the mortgage at completion.

We accept applications for mortgages where the income or assets to pay the mortgage are paid in £ sterling only.

If you apply for a mortgage with us we will instruct a basic valuation on behalf of the Society which is solely for the use of the Society in assessing the adequacy of the proposed security for mortgage purposes and in determining the amount (if any) to be advanced on mortgage.

You are strongly recommended to obtain a detailed survey from an independent, qualified surveyor.

If you are having a Building Survey or Home Buyers Survey, please let us know full details of the surveyor. We may be able to instruct the same surveyor to carry out a valuation on our behalf, which may reduce your cost.

The Valuation Fees for the basic valuation on behalf of the Society can be found by clicking here.

Other costs payable by you in respect of a mortgage can be found by clicking here and include:

An Administration Fee. This is payable on application and is non refundable
Redemption/Discharge fee which is payable on the final repayment of the mortgage and is non refundable
Deed Release fee. This is payable on the final repayment of the mortgage and in non-refundable

In addition costs may be payable by you in respect of a mortgage to include:

Where the bank instructs solicitors to act on our behalf in relation to the completion of a mortgage an estimate of the costs payable will be contained in the Key Facts Illustration provided to you. The costs in this connection are non-refundable
Costs payable to your instructed Mortgage Broker and solicitors.

Your home may be repossessed if you do not keep up repayments on your mortgage.

If you fail to keep up with payments on your mortgage a 'Receiver of Rent' may be appointed and your rental property, or other property used as security, may be repossessed.

Affordability

When considering either a mortgage, or additional borrowing on your mortgage, it is very important that you are able to afford the mortgage payments as well as your bills.

As everyone will have very different financial commitments, your independent mortgage advisor will need to provide us with details regarding your income, expenditure and other assets, plus your mortgage requirements. We will then be in a position to make an individual assessment based on your personal circumstances.

Arrangement Fees

Changes to Terms and Conditions

Charges

Your Privacy

All customer data is held in strictest confidence and is not given to any person or company outside the Society without your written authority, or unless we are required to do so by law, public duty, or if our interests require disclosure.

The information we hold may be used by us to send you details of other products or services we offer.

If you do not wish to receive details of other products or services, write to:

Marketing Department, Harpenden Building Society, Mardall House, 9-11 Vaughan Road, Harpenden, Herts, AL5 4HU.

All customers have the right to know what information we hold about them. Customers should write to:

Address:

Data Protection Officer
Harpenden Building Society
Mardall House
9-11 Vaughan Road
Harpenden
Herts.
AL5 4HU

privacy@harpendenbs.co.uk

There will be no charge for the this information, unless the Society deems it to be manifestly unfounded, excessive, or a duplicate copy of documentation.

Credit Reference Agencies

Customer Service

The Society aims to offer a first-class customer service. We will treat you as an individual. There are no call centres or credit scoring. Simply tell us your requirements and we will do our best to help you.

If you require any information about your mortgage, either before or after completion, please do not hesitate to ask. We also welcome suggestions to help us improve our service in the future.

If at any time you have a complaint, we would like to hear about it. A copy of our Complaints Procedure can be downloaded by clicking here.

Early Repayment Charges

Not all HBS products are subject to Early Repayment Charges, however those that are will also be subject to a maximum allowance in capital repayments per 12 month period of 10%. Any capital repayments over 10% will be subject to a 2% Early Repayment Charge until the end of the initial discount period. No Early Repayment Charges will be payable on redemption or for capital repayments once the initial discount period has come to an end.

Financial Difficulty

A mortgage is a long-term financial commitment so it is important to give the matter careful consideration at the outset. Unexpected changes in personal circumstances could have an adverse effect on your ability to repay your mortgage loan.

Please contact the Society as soon as possible if you find that you are in financial difficulties or anticipate problems in paying your mortgage.

If you do have financial problems, we will always try to assist and take a fair approach to assessing your circumstances. Please refer to our “Problems Paying Your Mortgage” page for more information.

Insurance

It is important to make satisfactory insurance arrangements, including life, critical illness, buildings, contents and unemployment, accident and sickness. It will be your responsibility to check that such policies are in place and that the premiums are paid in full.

Buildings insurance for the full cost of reinstatement is compulsory. You must supply the Society with a copy of the Policy. It is your responsibility to ensure that satisfactory insurance is in place at all times from exchange of contracts until the redemption of your mortgage. Alternative arrangements may apply if the property is leasehold, depending on the provisions of the lease. If no purchase is involved, cover should be in place from the date the mortgage commences.

Interest Rates

We only offer variable interest rate mortgage products. Please ask us at any time if you are unsure about what interest rate applies to your mortgage.

Interest is charged on the outstanding mortgage balance at the beginning of each year and adjusted each time the product’s interest rate changes. We will notify you in writing of the change in the interest rate and the revised monthly payment. If the change is an increase, the notification will be in reasonable time before the change is to take effect.

The Annual Percentage Rate (APR) takes into account factors such as the amount and type of your mortgage, the term of years, how often interest is charged, and any fees payable. Written credit quotations are available on request. Applicants must be aged 18 or over.

Please ensure that you are confident in maintaining your mortgage payments in the event that interest rates increase.

Mortgage Repayment Options

Repayment mortgage

With a repayment mortgage you make monthly payments to us over an agreed number of years (called the “mortgage term"). A typical mortgage will be for a 25 year term, but they can be for shorter or longer periods. As long as you make all the payments agreed with us, the whole loan will be repaid by the end of the term. Bear in mind, though, that your monthly payments will increase if interest rates rise.

Interest-only mortgage

With an Interest-only mortgage your monthly payments only cover the interest on the loan. They do not pay off the amount you have borrowed. In these circumstances, you must have in place a credible repayment strategy to pay off the amount borrowed by the end of the mortgage term.

There are various repayment strategies that are acceptable depending on your personal circumstances. Options could include downsizing, endowment policies, ISAs or other savings vehicles, personal or stakeholder pensions, or the sale of other assets or investments. We cannot provide you with advice or information about savings schemes. An independent mortgage adviser can help you assess your options for repayment of an interest-only mortgage.

Will it pay off the mortgage?

Most interest-only repayment strategies involve some risk in building up sufficient funds to repay the loan.

With an interest-only mortgage, it is your responsibility to make sure you have enough money to repay the loan at the end of the term. In order to do this, you will need to regularly monitor the performance of your repayment strategy. If an investment grows more slowly than expected, you may need to increase your monthly payments into the savings scheme, top up your savings in other ways, convert to a repayment mortgage, or find an extra lump sum at the end of the term.

If there are insufficient funds to repay the mortgage on the agreed date, you will either have to re-structure the mortgage or sell the property in order to repay the debt.

Can you pay off the mortgage early?

Yes. Your mortgage can be repaid in full, or part, at any time, and this will save you interest.

Interest rate changes will result in your monthly interest payments changing.

Mortgage Terms

You can select a mortgage term of up to 35 years, subject to being able to demonstrate affordability throughout the term and a satisfactory valuation report. Personalised illustrations are available over various terms from your independent mortgage advisor. Please bear in mind that shorter terms result in higher monthly repayments, but lower total payments over the full term. During the period of a repayment mortgage we can, on written request, following advice from your independent financial advisor, amend the mortgage term to suit your changing financial circumstances. You can also switch from a repayment mortgage to an interest-only mortgage, or vice versa, during the agreed term, subject to circumstances. The consequences of such actions should be discussed with your independent financial adviser. See our Tariff of Charges for any charges involved.

Solicitors Legal Advice and Costs

Valuation Fees