Your Mortgage Guide
This guide has been designed to help you through the application process, from understanding how much you could borrow to getting the right survey.
- Step by Step Guide
- First time Buyers
- Mortgage & Repayment Types
Your Principality - your mortgage
At Principality we’ve been looking after our Members’ interests for more than 150 years. Our consistently strong performance helps ensure we are best placed to give you great products and services. And with more branches in Wales than any other building society, we’re always on hand should you need our help and support.
We're here to help you
We know that everyone’s circumstances are different, so our Mortgage Advisors are on hand to help find the mortgage that’s right for you. We are also here to help protect your family, home and possessions too – the things that matter to you most. So please remember, if you do need help at any stage of the process, please just ask and we’ll be more than happy to help you in any way we can.
Rather than simply multiplying your income, we’ll base the amount you could borrow on your individual circumstances, monthly income and monthly outgoings. To find out roughly how much you could borrow, why not try our mortgage calculator.
Alternatively, simply speak to a Mortgage Advisor in your local branch or call our Customer Contact Centre and they’ll explain your options in more detail.
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During your first meeting or telephone call, your Mortgage Advisor will ask you a few questions to make sure we’ll be able to proceed with your mortgage application. This should take no longer than 15 minutes.
If we are able to proceed, we can arrange a mortgage Agreement in Principle and start the application process.
This means we’ve already agreed in principle to lend you the money, although we will need to check various legal and financial details before we can make you a mortgage offer.
If we can proceed with your application, we’ll arrange an ‘application appointment’ for you, and give you a ‘pre-appointment pack’ for you to read before the appointment. It also includes some forms for you to fill in – please have them to hand during your appointment to make sure your appointment goes as quickly and smoothly as possible.
During your next appointment, we will gather some information about you and your finances. This is where the pre-appointment pack becomes very useful. The information we obtain from you will form the basis of the advice we will provide.
After we have collected all of the information we need, we will agree upon a time when we can talk to you to present our recommendation. The recommendation will be based on your individual circumstances making sure it is in your best interests.
You will need to find a solicitor or specialist conveyancer who will look after the legal side of your application for you. Buying, selling or remortgaging a house can be a complicated process with lots of legal details to sort out, so most people use a solicitor or specialist conveyancer to help them through the process.
There are a number of options available to you to provide a survey and valuation for the property. For house purchase applications, there are three different types of report for you to choose from:
The Mortgage Valuation
This is a basic report for the property to ensure that we can lend you money on it. Therefore it is purely for mortgage purposes and to help Principality assess your application. We need much less thorough and detailed information about the property, to enable us to decide how much we are prepared to lend to you, than you may need as a prospective buyer of the property. For instance, there may be serious defects in the property which are not revealed by the report, or there may be omissions or inaccuracies in it, which we would not consider but which could matter to you. Therefore we suggest that you also obtain a more detailed report on its condition and value, for example with a Home Buyers’ Survey & Valuation or a Building Survey Report, which can be undertaken at the same time as the valuation report for Principality.
The Home Buyers Survey and Valuation
This type of report is designed to keep costs to a minimum yet should give you a general opinion of the quality and condition of the property, particularly if the property you are looking to purchase is conventional in type and construction and was built in the last 30 years. It covers those parts of the property that are readily visible and easily accessible, and will identify any obvious evidence of serious disrepair, potential hazards and other matters that are likely to materially affect the property’s value. Minor or cosmetic defects may not be listed.
The Building Survey Report
This is a detailed examination of the property and provides a comprehensive report on the condition of the property, detailing technical information about its construction, the materials used in its build, and any structural or other defects. Although this type of report is typically more expensive, it could provide you greater information about the property. It should be seriously considered if the property is old, is of unusual construction, in need of structural repair or if you’re planning major conversion or renovation.
We understand there’s so much more to owning a home than just sorting out a mortgage. So when you receive your mortgage offer, we will also take this opportunity to discuss the protection options available to you.
Your mortgage is secured on your home, so you need to be sure that you have home insurance, in case the unexpected happens.
Contents insurance covers your possessions and buildings insurance covers the actual bricks and mortar of your property. Tailoring your buildings and contents cover means you only pay for the cover you choose.
None of us know what’s round the corner. Life insurance is very important in helping to protect your loved ones and covering your mortgage.
For more information see our insurance pages.
Handy hint: You must have your buildings insurance in place before you can exchange contracts.
When all the necessary legal and financial checks have been undertaken, you’ll then receive a formal mortgage offer from us.
If everything is going smoothly, we’ll aim to make you a formal mortgage offer within 10-15 working days of the full application and supporting documentation being received. You’ll receive a copy by post, with another copy going to your solicitor.
We’ll also take this opportunity to review your protection arrangements and help make sure everything’s in place, so you’ve got one less thing to worry about.
Towards the end of the process, if you are moving house, you will exchange contracts with the seller of the property. This will be followed by the completion of the sale, when your funds are sent to your solicitor to pay the balance of the purchase price or to fund any remortgaging.
Until contracts are exchanged, both you and the seller can walk away from the sale without any contractual liability. Before exchange, both your and your seller’s solicitor or conveyancer will need to be satisfied that their work is complete, that the survey or valuation report has been completed and that the formal mortgage offer has been received. Once this has all been done, your solicitor or conveyancer will ask you to sign your copy of the contract and the mortgage deed, and they will ask for any deposit to be paid. A completion date for the sale will be agreed and included in the contract. Contracts will then be exchanged and the non-refundable deposit will be forwarded to your seller’s representative.
Completion can happen on the same day as the exchange of contracts or up to several months later in the case of some new build properties. You should be aware that your mortgage offer has an expiry date which will be clearly stated on the mortgage offer documents you are sent. You should contact us if you think you may not complete before your offer expires so we can discuss the options open to you. When you complete, your solicitor or conveyancer will transfer the balance of the purchase monies to the seller. Any Stamp Duty Land Tax due is paid to HM Revenue and Customs. The transfer of ownership and your mortgage details are registered at the Land Registry.
Finally, and most importantly, your keys are handed over and you can move in!
Handy hint: You must have your buildings insurance in place before you can exchange contracts on your mortgage.
First time buyers
We know that buying your first home is an important milestone. Our trained Mortgage Advisors are here to help guide you through the process and to provide advice that is in your best interests.
Please use the tabs above, which can help you understand more about the application process and give you an idea of the things you will need to consider.
Understanding how much you could borrow
The amount you could borrow will depend on your individual circumstances, monthly income and monthly outgoings. It will also depend on the value or purchase price of the property you want to mortgage. This is called the loan to value (LTV) and is shown as a percentage. As a responsible lender, we will lend you what we have assessed as being affordable for you, calculated from the information you provided, rather than just multiplying your income.
Your Principality Mortgage Advisor will go through this with you but it could help to complete our quick and easy online mortgage calculator which can be used as a guide and help you work out how much you could borrow. It will also tell you what your monthly repayments would be for each mortgage product. Visit our mortgage calculator to get started.
Your Mortgage Advisor will discuss deposit options with you. If you’re not quite there yet, we have some great savings products that can help you save up for your deposit.
Variable mortgage terms
Most people think that a mortgage term is for 25 years. However, your Mortgage Advisor will look at your personal and financial circumstances and give advice on not only the product, but also the mortgage term that is in your best interests.
Shared Equity and Shared Ownership Mortgages
Shared ownership and shared equity are the two main types of low-cost home ownership schemes run by the Government or house builders to help people who cannot afford to buy on the open market to purchase their own homes. Shared equity means that you are able to buy a property at a discounted purchase price and the builder or Registered Social Landlord (RSL) provides funding for the remaining balance. This funding does not need to be repaid until the property is sold, and you do not have to pay rent. You will usually be given the option to buy the remaining portion after a set period.
Shared ownership means that you buy a share of a property and pay rent to the Registered Social Landlord who owns the remaining share. Your monthly outgoings will include repayments on your mortgage and rent for the part of the property not owned by you. You may be able to increase your share until you own the whole property – this is called staircasing.
Principality offer a range of shared equity and shared ownership mortgages for properties in Wales. We do not require a deposit for purchases in association with Registered Social Landlords, and we only require a 5% deposit for purchases in association with a builder.
Different types of mortgage
There are many different types of mortgages available. After assessing your needs and individual circumstances, our Mortgage Advisors will provide a recommendation as to which mortgage is in your best interests at that time.
Fixed Rate Mortgage
With our Fixed Rate mortgages, your payments stay the same for a fixed period of time – no matter what happens to interest rates and how high or low rates go.
Our Tracker mortgages move up and down in line with the Bank of England Bank Rate for a set period. So, if the Bank Rate falls, so will your monthly payments. Of course, if the Bank Rate goes up, your payments will too. There may be a minimum interest rate on a Tracker mortgage which means if the Bank Rate falls below a certain level, your monthly payments will not reduce further.
These are Variable Rate mortgages that are discounted against our Standard Variable Rate for a set period. The discount is usually a stated percentage below our Standard Variable Rate. There may be a minimum interest rate on a Discount mortgage which means if our Standard Variable Rate falls below a certain level, your monthly payments will not reduce further.
Standard Variable Rate
With our Standard Variable Rate mortgage, we set the rate of interest. This rate can go up or down at our discretion, usually because of changes in the Bank of England Bank Rate or other reasons. This is the normal rate without discounts or deals and it is the rate your mortgage will switch to once your special mortgage term has ended.
Early Repayment Charges may apply on many of our mortgages – see our Mortgage Expenses tab for details.
By the end of the mortgage term, you need to have repaid the full amount you’ve borrowed, plus the interest. We charge interest daily, which means that each time you pay off part of your mortgage you get the benefit the very next day.
Each month you repay a part of the amount you borrowed plus that month’s interest. This means the amount outstanding on your mortgage reduces each month, so by the end of the term, provided you have made all payments when they are due, you’ve repaid the full amount.
Interest Only Mortgages
Your monthly payments only cover the interest. This means you pay less each month but at the end of the term you still owe the full amount you originally borrowed. You must have at least 50% deposit, equity of £150,000 and be able to prove you have a strategy for repaying the amount you wish to borrow before we can consider giving you an interest only mortgage.
Making sense of mortgage expenses
Mortgage Commitment Fee - Some mortgage products require a Mortgage Commitment Fee, which is charged when you apply for the mortgage, and is not refundable.
Legal Fees - You’ll need to pay fees to your solicitor or conveyancer, as well as the cost of any land registration fees and search fees.
Surveyors Fees - The cost of undertaking a property valuation or survey.
Stamp Duty - This is a government tax that you have to pay if the purchase price is above a certain figure. For more information visit www.gov.uk
Product Fees - Some types of mortgages may be subject to a product fee. You can either pay a product fee by cheque, or you can choose to add it to your loan amount. However, if you do add it to your loan, you need to be aware that you will pay interest on the amount for the term of your loan and therefore it will cost you more.
Early Repayment Charge - An Early Repayment Charge may be payable if you choose to either repay your mortgage (in full or in part), or switch your mortgage to another provider before the end of your current mortgage deal.
Discharge Fees - We charge a discharge fee when you pay off your mortgage in full.
We offer a document storage service to safeguard your important documents. Just ask your Mortgage Advisor about this when you apply.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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