Freestyle®Mortgages from Standard Life Bank - Frequently Asked Questions

First things first

How much can my clients borrow?
As long as you can afford the payments, and depending on which product you choose, we may be willing to lend you the following:

Are there any initial costs involved?
Your client will not be asked to pay any costs until they have chosen the right Freestyle Mortgage for them.

Please refer to our tariff of charges for all fees associated with our Freestyle Mortgages, just click on the link in the Related Links box.

Can my client add their fees to their mortgage?
Moving house or remortgaging is expensive enough. The good news is, we can assist your clients with some of their costs.

Booking/arrangement fee
The booking fee (for fixed rate mortgages) or mortgage arrangement fee (for all other mortgages) can vary according to the product they have chosen but can be added to their loan if required.

They should be aware that their booking fee, once paid, is non refundable.

If they have chosen to add Freestyle Cash Reserve to their mortgage, the one-off £99 activation fee, if applicable, will also be added to the loan. A fee of £20 is payable for each drawdown from their Cash Reserve.

Valuation Fee
There is no standard valuation fee and no standard legal fee with our Freestyle remortgage package.

For all other customers if your clients choose to add the valuation fee to their loan, the standard valuation fee and the valuation admin fee are reimbursed to them within seven working days from completion and the amount will be added to the mortgage.

View our valuation scales.

Legal fees
Using the Freestyle remortgage package your client has two options:

• have our panel solicitors carry out the standard remortgage work;
  or
  
• select a solicitor of their choice and £250 will be refunded on completion.

Either way the solicitor will act solely on our behalf to carry out the legal work for the remortgage. If additional non-standard legal work is required, or your client requires their own legal advice, they will need to pay for this.

For all other customers they can add mortgage legal fees of £250 to their loan. Your client will need to pay their solicitor and we'll refund £250 to them within 7 days of their mortgage completing. £250 will then be added to their loan.

Offsetting Administration Fee
If your clients have chosen the Offsetting feature they can add the fee for this to their loan.

The facts
If adding their fees to their loan, your client can choose the term from a minimum of 1 year up to the term of their mortgage - it's up to them - and they can overpay whenever they wish.

The maximum amount of fees your client can add to their loan is £3,000 or 2% of their property value, whichever is lower.

Interest will be charged on your client's fee account at the Freestyle standard variable rate.

Adding fees to their loan will increase your client's monthly payments, interest payable and remaining balance secured on their property.

Do my clients have to verify their income?
If your client's loan (including any additional borrowing) is 75% or below of the value of the property, then income verification may not be required. Your client's application will still be subject to a credit check.

If your client's loan is over 75% loan to value, then they will need to confirm their income. If your client is self-employed, we have an income verification certificate for their accountant to complete instead of them sending in 2 years' certified accounts.

Do my clients have options on how they can repay?
Your clients can pay interest-only - which means that they will have to run a suitable repayment vehicle (such as a pension or endowment) to pay off the capital sum borrowed at the end of the mortgage term.

Alternatively, they can take a repayment mortgage where each monthly payment covers both the interest due and part of the capital, reducing their outstanding loan each month. They can also split their mortgage so that a portion is paid interest-only while the remainder is repayment.

How long can my clients take to repay?
It's up to your client to decide how long they want to take to repay their mortgage. The minimum is 3 years and the mortgage must be repaid on or before the applicant's intended retirement date. This will normally be by age 65 although requests to lend beyond this age will be considered where satisfactory evidence of continuing income is available. The less time your client takes, the higher their monthly payments will be.

What about security?
Standard Life Bank will take first legal charge over the mortgaged property which must be located in the UK. All properties must be surveyed by arrangement with Standard Life Bank approved valuers. At a minimum, we require to see a standard valuation report.

What insurance cover will my client need to have?

Buildings and Contents Insurance

At Standard Life Bank, we are delighted to introduce you to AXA Insurance who offer competitive buildings and contents insurance for your clients. Whether your clients are existing Standard Life Bank customers or not, you'll find AXA Insurance can offer the right cover at the right price.

To register with AXA Insurance just print off the registration form below and return to:

Agency - Broker Development
AXA Insurance
Civic Drive
Ipswich
IP1 2AN

AXA Insurance Registration form

On receipt of your registration form, AXA Insurance will send out an agreement for you to sign and return. You'll then receive your AXA Insurance agency number so you can start introducing business to AXA Insurance.

If you have any problems with the registration form, you can call AXA Insurance on 01473 204315.

Mortgage Payment Protection Insurance

At Standard Life Bank, we are delighted to introduce you to Cardif Pinnacle Insurance who offer a competitive mortgage payment protection insurance policy.

For more information and to register with Cardif Pinnacle, please click on the link below:

Cardif Pinnacle Insurance website

Once registered, you will be able to quote and apply quickly and easily for Cardif Pinnacle's mortgage payment protection insurance on behalf of your clients.

If you are already registered and have forgotten your log in details, please email Cardif Pinnacle at:

newbusinesscallback@pinnacle.co.uk

What if my client's property is a new build?
If you let us know your client's property is a new build, with your assistance, we can guarantee a 28 day timescale to Formal Offer to comply with the exchange of contracts.

Standard Life Bank will accept new build properties from the following:

• A National House Builders Council (NHBC) registered house builder
• A Zurich New Build Scheme Member
• Premier Guarantee
• The Housing Association Property Mutual (HAPM) Scheme
• Building carried out under Architect's supervision

New Build properties are generally not complete at the time your client makes their mortgage application, therefore, their mortgage offer is based on the projected property value.

Please note, your client must use one of our panel of surveyors and a property re-inspection fee of £55 will be payable.

Running the Mortgage
How are repayments made?
Monthly payments are made by Direct Debit. Your client can choose the day in the month which suits them and they can change it at any time.

Will my client get regular statements?
Mortgage statements are sent out annually and will detail the transactions and outstanding balances of your client's mortgage accounts. They will also show, if applicable, how much Cash Reserve remains available to them. They can request an interim statement at any time. Please note, however, that this interim statement will not detail how much is available in their Cash Reserve.

Flexible options

Can my client make overpayments on their Freestyle Mortgage?
Your client can make overpayments either regularly or as a lump sum (minimum amount £1,000). Your client can make unlimited overpayments on any variable rate part of their mortgage. Customers who choose a fixed rate mortgage can overpay by 10% per annum of the balance on the fixed rate portion of their mortgage. Their account will be recalculated on an annual basis. If your client overpays more than 10% in 12 months or repays their mortgage in full within their tie-in period, they will incur early repayment charges.

The effect of overpayments applies immediately because we calculate interest daily. On making an overpayment, your client can choose to have their account recalculated and their monthly payment decreased, or build up a Prepayment Reserve which means the overpayments they make can be borrowed back whenever they want, subject to lending criteria and a minimum borrowing amount of £1,000. An admin fee applies every time your client borrows from their Prepayment Reserve. Any funds borrowed back will increase your client's monthly payments, interest payable and remaining balance secured on their property.

Can my client take a payment holiday?
Once your client has made 6 consecutive payments they can take up to 2 payment holidays a year subject to sufficient funds in their Cash Reserve or Prepayment Reserve. To arrange a payment holiday, your client needs to call us 22 days in advance of when they want to miss their payment.

Taking a payment holiday will increase their monthly payments, the interest payable and the remaining balance secured on their property.

Offsetting

What is Offsetting?
Offsetting allows your client to use money, such as their savings, to reduce the interest they pay on their mortgage. Instead of keeping money in a savings account, they can move it to an Offset Reserve, where it is offset against their mortgage. This means that while we don't pay interest on this money, we don't charge any interest on the equivalent amount of money on the outstanding mortgage balance either so the interest owing on the mortgage is reduced.

Additionally, unlike a savings account, tax is not payable on the interest benefit gained by holding money in an Offset Reserve. Your client can also move money in and out of their Offset Reserve at any time, regularly or in lump sums by phone, online or by direct debit (withdrawals take three working days to clear).

Please, note that tax treatment of the Offset Reserve may change in the future and moving money out of the Offset Reserve will increase the interest payable on your client's mortgage balance. The amount your client can save by paying less interest on their mortgage can then be used to reduce their mortgage term or lower their monthly payment.

What are the benefits of Offsetting?
Interest is calculated on the outstanding mortgage balance minus the amount in their Offset Reserve but the monthly payment is always calculated on the total outstanding mortgage balance. Your client can either maintain their level of mortgage payment or reduce their mortgage payment.

So what are the effects of these options?
If your client chooses to maintain their current payment level, they will effectively be overpaying because the interest payable has reduced. This will further reduce the total interest charged and, as their mortgage balance reduces:

• for repayment mortgages the possibility of repaying their mortgage early is increased; and
• for interest-only mortgages the capital balance outstanding at the end of the mortgage term is reduced

• Where a variable rate of interest applies to any part of the mortgage, monthly payment will be recalculated at a rate change or on an annual review, whichever is earlier.
• Where a fixed rate of interest is applicable to the entire mortgage, recalculation will be carried out at the end of the fixed rate period.

Until their review they will effectively be overpaying so, at their mortgage recalculation, we will calculate the new payments on the reduced mortgage balance whilst keeping the mortgage term the same. That means the new payments will be lower than they otherwise would have been.

Will my clients pay a higher interest rate on their mortgage if they choose to offset?
No. Your client can use - or offset – their savings against their mortgage balance and significantly reduce the amount they pay in interest. This means that while we don't pay interest on this money, we don't charge any interest on the equivalent amount of money on the outstanding mortgage balance either so the interest owing on the mortgage is reduced. The amount saved by paying less interest on the mortgage can then be used to cut years off the mortgage term or lower monthly payments.

How do my clients operate their Offset Reserve?
Moving money in and out of the Offset Reserve is easy. The Offset Reserve is linked to your client's external bank account and your client can move money in and out of their Offset Reserve at any time, regularly or in lump sums by phone, online or by direct debit (withdrawals take three working days to clear). Please note, your client must leave at least £1 in their Offset Reserve at all times and moving money out of their Offset Reserve will increase the interest payable on their mortgage balance.

Is there a charge for using the Offsetting facility?
A one-off fee of £99 is payable if your client chooses to add the Offsetting facility to their Freestyle Mortgage.

Options for the future

What happens when a fixed rate or a discounted period finishes?
When a fixed rate or a discounted rate period finishes, the rate will automatically revert to our Freestyle standard variable rate and we'll write to tell your client how much their payments will be. At this point your client could opt for a fixed rate or choose another discounted rate, this is subject to availability and to our usual lending terms. There may be a booking/arrangement fee payable.

Can my client borrow more money in the future?
Yes, if your client chooses a product where access to additional funds is available. A drawdown fee of £20 applies every time your client borrows from their Cash Reserve.

When your client first applies for their mortgage, we'll agree how much we are willing to lend them. If they borrow less than the amount we are prepared to lend, and your client can afford the repayments, they'll have access to a Cash Reserve. We'll ask whether they want to add the Cash Reserve facility. This feature has a fee of £99 which is added to your client's arrangement/booking fee.

Your client can pay back any amount borrowed from their Cash Reserve over a term that suits them, from the minimum term of one year to the remaining term of their mortgage. Best of all, borrowing will be at mortgage rates and that can mean a considerable saving when compared with other forms of finance.

Even if your client borrows the full 90% at the start of their mortgage, they may qualify for Cash Reserve in the future. Simply contact us for more details at the time.

Your client can borrow any amount from £1,000 to the maximum of their Cash Reserve, subject to lending criteria. Remember, any additional borrowing will increase your client's monthly payments, interest payable and remaining balance secured on their property.

Can Freestyle move with my client when they move house?
Just let us know when your client is moving and we'll help reshape their mortgage to suit, depending on the options that are available to them at that time.

If your client is on a fixed rate, they can take that rate with them. For any additional funding that they need, we'll offer them our current product offering at that time.

If your client is on a discounted variable rate, they'll be able to get another discounted variable rate, based on what's available at the time. Or, they could switch to a fixed rate with predictable monthly payments, which can be useful with all the expense of moving. A booking fee will be payable if your client chooses a fixed rate mortgage.

If your client moves home and takes their new mortgage with Standard Life Bank, our Redemption Discharge Fee plus any early repayment charges that they may have had to pay when redeeming their mortgage will be refunded, as long as their new Freestyle Mortgage completes within 30 days of redeeming their original Freestyle Mortgage.

Next step

How Do I apply for a Freestyle Mortgage on behalf of my client?

To apply, use our online mortgage application and get a lending decision in around 15 minutes.

If you'd prefer to speak to us, you can call our Sales Team on 0845 845 8451. Our lines are open Monday-Friday 8am-6pm.