Newbury Building Society

Please select an area below for more information

The mortgage contract
Do you have an operating area?
Interest rate options
Mortgage costs
The homebuying process
The remortgage process
Approving your mortgage
Repaying your mortgage
Home insurance
Financial difficulties
Borrowing extra on your mortgage
Buying to let
Customer satisfaction
What else do I need to know?

What is a mortgage?

A mortgage is simply a loan, obtained by using property as security. As very few of us can afford to buy our homes outright, many of us at some stage of our lives will require a mortgage. Taking on such a large commitment is probably the most important financial decision you are ever likely to make.

back to top

What is a CAT standard mortgage?

CAT standards are criteria set by the Government giving minimum standards for Charges, Access and Terms, aiming to be straightforward, clear, fair and easy to understand. Mortgages which qualify for the 'CAT standard' may or may not offer borrowers better terms. It should be noted that they do not carry a government guarantee. A 'CAT standard' mortgage may not necessarily be the best for you, as personal circumstances differ.

back to top

Who is responsible for a mortgage?

If you take out a mortgage on your own, then you are responsible for it. If you are taking out a mortgage with another person then both of you are 'jointly and severally' responsible for it. This means that each borrower is responsible for ensuring the mortgage is paid satisfactorily.

If, at any time during the mortgage term, one of you wants to be released from your joint mortgage contract (due to separation, for example) then you must contact us. We will ask the remaining borrower to complete an application form so that we can assess his/her status and decide if he/she can take sole responsibility for the mortgage.

If a party to your mortgage dies, the mortgage is automatically transferred into the name of the remaining borrower. We will need to see the death certificate if your mortgage is held in joint names.

back to top

Do you have an operating area?

We lend in areas where we have an understanding of the needs of our market.

This area is currently a 30/40 mile radius of Newbury.

Click here for a map which details the operating area. Our branches and surrounding communities are contained within the boxes. The grey shaded area is outside our current operating area.

We will also lend to people who have been members of the Society for two years or more. The property must be located in England or Wales.

back to top

What interest rate types are available?

There are many different types of mortgage products available in the market place. We may offer one or more of these options, depending on the prevailing market conditions - please see our current mortgage product range. The main types fall into the following categories:

back to top

Variable rate mortgages

A variable rate mortgage has an interest rate that can fluctuate. If the mortgage interest rate falls, your monthly mortgage repayment reduces but if the mortgage interest rate goes up, so does your monthly repayment. All lenders have a standard variable mortgage interest rate on which they base their variable mortgage products. The lender will decide when to increase or decrease this standard rate, usually (but not always) based on the movement of the Bank of England's Base Rate.

back to top

Fixed rate mortgages

A fixed rate mortgage has an interest rate which stays the same for a set period of time. During the fixed rate period your monthly repayments stay the same.

Fixed rate mortgages are usually taken out by people who need to budget or believe generalinterest rates are likely to increase. However, if a lender's standard variable mortgage interest rate falls below the fixed rate level, then you will still continue to pay at the fixed rate and will therefore pay more.

back to top

Capped rate mortgages

With a capped rate mortgage, the interest rate has an upper fixed limit for a specified period, known as a 'cap'. A variable interest rate applies to this type of mortgage. If the variable interest rate exceeds the capped rate, you benefit by paying the capped rate. If the variable interest rate falls below the capped rate, you will benefit by paying the lower rate.

Fixed and capped rate mortgages can be more expensive to set up because they offer you a guaranteed interest rate above which your mortgage payments will not increase. They also tend to have a charge for repaying part or all of your mortgage early.

back to top

Discounted rate mortgages

With a discounted rate mortgage, the lender's standard variable mortgage interest rate is discounted for a specified period of time. The discounted rate could be a set amount for a specific term or be 'stepped', for example a 2% discount in year one and a 1% discount in year two.

back to top

Flexible mortgages

Many mortgage lenders today offer a more flexible approach to mortgage borrowing by, for example, allowing mortgage overpayments, offering daily interest charging or even allowing payment holidays. Current account mortgages are now also available which allow you to combine your mortgage with other traditional banking services within one account. Your suitability for these kind of mortgages depends very much on your individual circumstances and lifestyle, so let us advice you.

back to top

Tracker rate mortgages

Tracker rates are another form of variable interest rate, usually linked to the Bank of England's base rate. The interest rate is usually a specified percentage above or below the Bank of England's base rate for a period of time.

back to top

What are the one-off costs involved in taking out a mortgage?

There are various costs connected to a mortgage of which you need to be aware. The following costs relate to buying your house, remortgaging and setting up a mortgage:

Legal fees

If you are buying your home, the fee paid to your solicitor covers all legal work involved in transferring the ownership of the property to you. This is called 'conveyancing'. This fee will often be a percentage of the cost of the home being purchased.

A Local Search is undertaken to check for plans for building and/or development of the land near to the property that may affect its value. A bankruptcy search is carried out on you to ensure you are not bankrupt and therefore unable by law to borrow. A separate fee is charged for each search. Land registry fees are paid in order to register you as the new owner of the property and to register our mortgage on the Land Registry's Charges Register.

For remortgages, a fee is paid to your solicitor to act in removing the existing lender's mortgage and adding our mortgage to the Charges Register. Your solicitor will also carry out a local search and bankruptcy search (as above).

Your solicitor's fees are paid on completion of the mortgage and must be paid from your own funds (fees for searches are usually paid up front). Mortgage products may offer a 'free legals' benefit where the bill would be settled direct with the solicitor.

Where "free legals" apply, they are for remortgages only. The legal work will be carried out by Newbury Building Society using title insurance and the cost, which covers HM land registry fees, a title insurance premium and other disbursements will be paid by us. If for any reason the remortgage does not take place, you will need to pay any legal costs incurred (maximum £250). The "free legals" service does not include the legal work involved for registering unregistered land or transferring property from one person to another (the names and addresses of the borrowers must agree precisely with those held at HM Land Registry). If legal work is required in those areas, a solicitor will be required to act at your cost.

Generally we will use the same solicitor as you, providing they are registered with the Law Society and the firm has two or more partners. If a conflict of interest arises during the legal process, then we would need to employ our own solicitors at your cost. This situation happens very rarely.

Stamp duty

You will pay a Government Tax called 'Stamp Duty' if the property you are buying costs over £125,000. Currently, stamp duty is payable at the following rates (please check these rates are still valid):

For example, a property purchase price of £270,000 would incur stamp duty of £8,100. Stamp duty is paid on completion of the mortgage and is normally paid as part of your solicitor's overall bill. You do not pay 'Stamp Duty' when you remortgage your home.


Estate agency fees

If you are selling a property you will usually employ an Estate Agent to help you sell it. The fees charged cover services such as advertising your home and negotiating with buyers. This fee is usually paid when the purchase money has been received by your solicitors. An Estate Agent may charge around 2% of the selling price and it is normally agreed before you appoint them. You could decide not to use an estate agent and sell privately which will be at a much lower cost but may be more difficult.


Mortgage application fee

Some lenders will charge a fee to arrange your mortgage for you. This is to cover the cost of the administration associated with assessing your application and setting up your mortgage account.


Valuation fee

A standard mortgage valuation is an inspection carried out by a valuer to make sure that the property is suitable security for the loan required. The amount of the fee is based on the purchase price or estimated value. The mortgage valuation is carried out for our purpose but we will give you a copy of the report. Some mortgage products may offer a free mortgage valuation but if you want a more detailed report there will be a supplement to pay.

A homebuyer's report is a 'half-way house' between a mortgage valuation and a full building survey. It was introduced as a more moderately priced alternative to a full building survey and as a more detailed alternative to a mortgage valuation. It is normally suitable for properties less than 100 years old. A full building survey is a thorough and complete inspection of the property done to your specification.

If you decide to commission a homebuyer's report or full building survey, we will still need to have a mortgage valuation carried out for us. In most cases this can be done simultaneously with the more detailed report.


Higher lending charge

A higher lending charge is paid when a mortgage is more than a certain percentage of the purchase price/valuation of the property (lower of the two), as specified by the lender, in our case 75%. The fee is calculated on the portion of the mortgage loan above this percentage.

The higher lending charge is used to purchase insurance (indemnity) cover from an insurance company and is therefore sometimes called a 'mortgage indemnity fee'. This cover allows us to lend a higher percentage of the property value by covering the increased risk of loss associated with this level of borrowing.

You can add the fee to the mortgage (depending on size of the mortgage and the value of the property) or it can be deducted from the loan amount on completion. Sometimes the cost of the fee is covered as part of the mortgage product. Newbury Building Society does not normally make Higher lending charges.

If a mortgage is in arrears and is subsequently repossessed, the sale proceeds may not be enough to cover the outstanding mortgage debt plus all costs associated with the property sale. In these cases we would call upon the insurance policy to cover the loss. It is important to note that the insurance policy protects the lender, not the borrower. Once the monies have been paid out to the lender, the insurance provider can then recover the loss from the borrower (whose property has been repossessed) to recoup the funds.

back to top

How is the interest on my mortgage calculated?

All our mortgages are charged interest on a daily basis on the total amount outstanding on the mortgage. As monthly repayments (and any overpayments) are made to the mortgage, they reduce the balance immediately (subject to cheque clearance) and therefore the interest charged. The only exception to this is a lifetime mortgage, which is charged interest on an annual basis.

If you pay by direct debit, cash or standing order, we will treat your payment as cleared funds on the day that it arrives (you need to allow 2 or 3 days for standing orders). If you pay by cheque, we will treat your payment as cleared funds on the fourth working day after your mortgage is credited (this includes the date we receive it). So, for example, if you pay your mortgage on Monday your cheque will be cleared on Thursday.

Some lenders charge interest on an annual basis. This means that interest for the full year is charged annually on the balance outstanding and individual repayments during the year do not affect the balance on which interest is charged until the beginning of the next year. Annual interest increases the APR on repayment mortgages and incurs higher monthly repayments.

back to top

What is an Annual Percentage Rate (APR)?

The Annual Percentage Rate (APR) is an industry-wide method of comparing interest rates and charges for credit between lenders, so that you can make an informed decision on the price implications of your mortgage. The Consumer Credit Act requires lenders to show an APR whenever a 'published rate' is shown.

The APR is a single rate that takes into account the costs of setting up the mortgage, the interest rate applied over the mortgage term and how that interest rate is charged (annually, monthly or daily).

It is important to look at the APR because it reflects the true cost of a mortgage over the long term. For example, some lenders may offer a good introductory rate but charge a higher than average standard variable mortgage interest rate at the end of it, which will increase the overall cost and therefore the APR.

back to top

What other costs may I incur during the life of my mortgage?

General administration fees

We have a general tariff of for services that are outside the basic administration of your mortgage account. As a mutual society, we believe it is unfair to penalise our Existing members as a whole by absorbing the cost of these 'extra' services into our mortgage and savings rates. We will give you a tariff of fees before you take out your mortgage with us.


Early repayment charge

You can repay your mortgage at any time during the term. We will charge interest up to the date of receipt of cleared funds, which is typically four working days after the date you repay your mortgage.

Sometimes, if you repay your mortgage early, in full or in part, an additional charge may be made to compensate us for the mortgage not running its full term. This charge is called an 'early repayment charge'. Early repayment charges are usually attached to preferential interest rates. If you have an early repayment charge, it will be detailed in mortgage product literature and your mortgage offer.

back to top

How does the home buying process work?

The home buying process can be broken down into a number of key steps:

Agreement in principle for a mortgage

When you decide to buy a property, you may want to know how much you can borrow and whether or not you qualify for a mortgage. We will look at your income and commitments and tell you an amount we would be prepared to lend you. This agreement is 'in principle' in that the details you give us will need to be verified when you come to apply for your mortgage.

Newbury Building Society operates a 'mortgage certificate' service, whereby you apply to us for your mortgage before you have found your new home. We carry out all the status enquiries (verify the information you have given us) and let you know a figure that we are prepared to lend you. This is subject to a satisfactory valuation of the property you choose.

We confirm our commitment on a mortgage certificate, which you can show your estate agent when you've found a property, giving you extra bargaining power with the vendor. When you've found your new home, we will value it and providing the valuation is satisfactory, we will give you a formal mortgage offer. The process is speeded up because we are assessing your status whilst you are looking for your home!

back to top

Finding a suitable home

You can find property advertised in estate agents offices, property papers or local and national newspapers. There are also websites on the Internet that can help you. There are a number of things you need to consider, such as: property style; what is the area like; what local schools are like; if there is adequate storage and will you be able to sell the property when you want to move. Draw up a checklist of things to consider.

back to top

Formal mortgage application

When you have found a suitable property and agreed a purchase price with the seller, a formal mortgage application is made to us. The application form is used by us to assess your suitability for the mortgage you have requested. We will verify any details you have given us by writing for confirmation from an independent source e.g. your employer. We will do our best to keep the process efficient by asking for written verification from you where possible e.g. seeing your mortgage statements rather than writing to your lender.

back to top

Valuation

A mortgage valuation is an inspection carried out by a valuer to make sure that the property is suitable security for the loan required. The mortgage valuation is carried out for our purpose but we will give you a copy of the report. A valuation is carried out on every mortgage application and is usually instructed at the same time as the status enquiries are made. If you want a more detailed report, please tell us.

back to top

Mortgage offer

Once we have approved your mortgage, a formal offer of mortgage will be made to you. This document will explain the exact terms and conditions of the mortgage contract between you and Newbury Building Society. At the same time as sending you your offer, we will send a copy to your solicitor. The solicitor should have already started the legal process (see 'what are the one-off costs of setting up my mortgage?').

back to top

Legal process

Once you have received the mortgage offer the legal documentation can be completed. Your solicitor will draw up a legal contract for you and the vendor to sign. The signing of the contracts is called 'exchange of contracts'. A deposit (usually 5% or 10% of the property price) is payable at this time. Once exchange of contracts has taken place, you are legally committed to buy and the vendor is legally committed to sell. If either you or the vendor try to back out at this stage, legal action could be taken and you may lose your deposit.

When everything is in order you will sign a mortgage deed, which is the legally binding contract between you and us detailing the terms of your mortgage. At this stage the completion date is agreed, when the property becomes yours and you can move in.

back to top

Completion

Completion is the point at which the mortgage deed is signed and executed and all its conditions come into effect.

At this stage your solicitor sends a report to us requesting the monies to be released for the purchase. This report is called a 'Certificate of Title' and includes the date the solicitor requires the monies to be sent. Before we enter into a formal contract with you, certain information must be confirmed by your solicitor, which will also be recorded within the Certificate of Title. Your solicitor will confirm that the:

This confirmation provides us with the knowledge that the property can safely be accepted as security for the loan. We then arrange for the monies to be sent to the solicitor on the day before completion and confirm to you the monthly payments required on the mortgage. As the money for your purchase is sent by telegraphic transfer to your Solicitor a day early, to ensure it is there in time for completion to take place, interest will be charged from that date rather than the date the purchase is legally completed.

back to top

How does the remortgage process work?

The remortgage process can be broken down into a number of key steps:

back to top

Agreement in principle for a mortgage

There are a number of reasons why you may choose to remortgage but usually it is to get a better deal from another lender or to raise money for a specific purpose. When you decide to remortgage, you will need to know whether or not you qualify for the size of loan required. We will look at your income and commitments and tell you an amount we are willing to lend you. This agreement is 'in principle' in that the details you give us will need to be verified when you come to apply for your remortgage.

back to top

Formal mortgage application

When you have decided whether you want a like-for-like remortgage and/or to raise some extra funds, a formal mortgage application is made to us. The application form is used by us to assess your suitability for the remortgage you have requested. We will verify any details you have given us by writing for confirmation from an independent source e.g. your employer. We will do our best to keep the process efficient by asking for written verification from you where possible e.g. seeing your mortgage statements rather than writing to your lender. We will also follow up your references every other day by telephone.

We will introduce you to a Liverpool Victoria consultant, who will discuss your mortgage repayment options and review your life assurance and mortgage/income protection needs. We will also talk to you about home insurance and mortgage payment protection insurance to review your current arrangements and ensure you are adequately covered.

back to top

How much can I borrow?

The amount you can borrow depends on your individual circumstances, specifically how much you earn, what your other commitments are and how much the property is worth. We do have guidelines, which can be found in the Lending criteria section of this website. At Newbury Building Society, qualified mortgage underwriters look at each mortgage application individually and we do not rely on a credit scoring system like some other lenders.

back to top

What is a guarantor?

A guarantee is a written promise in which one or more persons, the guarantor(s) (the person giving the guarantee), agree(s) to be responsible for the present or future debt of another. The guarantee protects the lender should the borrower default. The guarantor (as party to the mortgage) will have access to mortgage account details.

The most common situations involving guarantees are where parents guarantee the debts of their son/daughter. As a guarantor, you should always seek professional advice on the commitment you are undertaking.

back to top

Do you use a credit reference agency?

To help us come to a decision on your mortgage application, we make enquiries of a credit reference agency. The information we receive relates to financial information registered at current and previous addresses. The 'credit search' will highlight county court judgements, property repossessions and defaults as well as credit agreements. The credit reference agency will keep details of the search we make.

In order to receive credit information, we have to release payment information (positive and negative) on our borrowers on a monthly basis. The data supplied is available to other lenders and may be taken into account in future applications for credit.

If you apply for a mortgage jointly with another person, a financial association will be created at the credit reference agency and will continue to be taken into account in future credit searches for either or both of you until the agency is advised otherwise.

back to top

How do you decide whether to approve my mortgage or not?

There are various factors to consider when approving your mortgage application. These are the main ones. Please also see our Lending criteria for buying & remortgaging your main residence, buy to let and commercial mortgages.

back to top

Income

Most lenders insist that the maximum mortgage allowable does not exceed a certain multiple of your gross basic salary. Some lenders will take into consideration overtime/bonuses/commission, mortgage subsidies, company cars etc. For self-employed applicants borrowing is usually based on a multiple of an average of the last 2 years net profit.

back to top

Long term commitments

Information on all outgoings is checked to ensure that you are not over-committed. 'Long term' is normally where the outgoing has more than 12 months to run. These liabilities may include the monthly cost of finance agreements e.g. loans, credit cards, hire purchase; child maintenance; school fees including childminding/nursery fees and other mortgages.

back to top

Amount of deposit

We will consider the loan amount you have applied for as a percentage of the purchase price or valuation figure (whichever is lower). This is known as the 'Loan to Value' (LTV). The lower the LTV, the larger the deposit and the greater the stake you will have in your home.

back to top

Credit history

It is important to us that you have conducted any previous credit satisfactorily. In order for us to do this, we need to look at a number of things: your previous mortgage payment record; payment of rent to landlord; payment of other credit cards, loans etc; and a credit search (by using a credit reference agency). We do not credit score like some lenders. Credit scoring is an automated system that rates you based on certain criteria. This is not always a true indication of the risk of a borrower to a lender.

back to top

Employment status

We need to ensure that you are in stable employment and are able to keep employment. We will look at your type of work; the stability of the industry you work in; your length of employment; type of contract e.g permanent, fixed term, temporary and whether you have any employment gaps.


back to top

What repayment options are available?

Your mortgage can be arranged over a period of 5 to 40 years, depending on your personal circumstances and the type of mortgage you choose. There are two standard ways to repay a mortgage:

back to top

Capital & interest repayment

The monthly mortgage payment is made up partly of a sum to repay a proportion of the amount borrowed (capital) and partly of a sum to repay the interest.

Given that a higher proportion of capital will be 'owed' in the early years of the mortgage, the interest element of the monthly payment is higher than it is in later years.

As the mortgage term progresses and the amount of capital owed begins to decrease, the proportion of the monthly mortgage payment representing interest decreases. This means that as the term progresses on a capital and interest repayment mortgage, the sum paid each month towards the capital becomes greater and the amount towards interest reduces. Providing all repayments are made, it is guaranteed that the loan will be repaid at the end of the term.

We strongly recommend you to take out life assurance (mortgage protection policy) to ensure your mortgage is repaid if you should die during the mortgage term. We can help you with this through our association with Liverpool Victoria.


back to top

Interest only

The monthly mortgage payment consists of an amount sufficient to pay just the interest due on the full amount of the loan (for the full term). The capital element of the loan will normally be repaidat the end of the term using some form of repayment vehicle. It is your responsibility to ensure that you have a repayment vehicle in place or some other way of repaying the mortgage at the end of the mortgage term. You also need to ensure any repayment vehicle is reviewed regularly to ensure it is on target to repay your mortgage at the end of the term.

You need to be aware that if you surrender an investment policy, such as an endowment, early then there could be adverse financial consequences, depending on the type of investment and your personal circumstances.

As with capital and interest repayment, life assurance is strongly recommended to ensure repayment of the outstanding capital should you die during the term. On some repayment vehicles this is automatically included. We can help you with life assurance and advice on choosing/reviewing your mortgage repayment vehicle through our association with Liverpool Victoria.

There are various types of repayment vehicles which can be used with an interest-only mortgage, for example:


back to top

Endowment policy

An endowment policy consists of two parts packaged together: a savings plan designed to increase in value to repay your mortgage at the end of the term, and life assurance to repay your mortgage should you die during the mortgage term. You pay premiums direct to the life assurance company.

You need to be aware that if you surrender an investment policy, such as an endowment, early then there could be adverse financial consequences, depending on the type of investment and your personal circumstances.


back to top

Pension plan

You can use part of the proceeds of a personal pension plan to repay your mortgage. Tax relief is currently available on pension plan contributions to those who are eligible. You do need to be aware though that by using the funds from your pension this will reduce the amount available for your retirement. You will usually have to buy separate life cover.


back to top

Individual savings account (ISA)

An individual savings account is a tax efficient savings plan, which can be used to repay your mortgage. Regular investments are made direct to the company who holds your ISA savings plan.


back to top

How do I make monthly payments?

We operate a direct debit system for monthly repayments. We will debit your bank account by the amount required as detailed in your mortgage offer, plus any payment of home insurance purchased through us. If the interest rate changes on your mortgage, we will automatically amend the direct debit amount, so you do not need to do anything. We will tell you at least 14 days in advance of any change to your direct debit payment.


back to top

Can I reduce or repay my mortgage early?

Yes, you can always reduce or repay your mortgage at any time. However, early repayment of all or part of a mortgage may have financial consequences depending on the mortgage product you take.

To enable a lender to offer a favourable interest rate deal (e.g. fixed/capped/discounted), a charge is sometimes applied if the mortgage is settled early. The charge will be a set amount or on a reducing scale depending on the terms of the product. This charge is called an 'early repayment charge'. If you do not have an early repayment charge on your mortgage, you can make overpayments and capital repayments without charge. An overpayment is an amount made in addition to your normal monthly repayment. A capital repayment is usually a larger amount, in our case a payment of £1,000 or more. If you make overpayments to your mortgage, you will find that, at interest rate changes, your registered monthly repayment will change more than expected, as overpayments are taken into account. Your mortgage term will remain the same. If you want to reduce your mortgage term, we ask that you make a capital repayment and advice us that you want to reduce your mortgage term. We will make the necessary adjustments to your mortgage account.

As all our mortgages are charged on a daily interest basis, any repayments, overpayments or capital repayments will immediately reduce the interest charged on your mortgage (subject to cheque clearance). Overpayments need to be made by standing order, cash or cheque in addition to the registered monthly payment by direct debit.


back to top

Can I take my mortgage with me when I move home?

Generally a mortgage product is 'portable'; which means that the terms and conditions of your current mortgage can be transferred to the mortgage on your new home. All our loans are portable.

If there is an early repayment charge on your existing mortgage, your new mortgage needs to be for at least the same amount as the old one to avoid payment of a charge. You still need to complete an application form because the mortgage is based on a new property and is subject to your current status and valuation.

back to top

Home Insurance

Buying a home is one of the biggest financial commitments you will make, so protecting that investment is a must. We think this is so important that we make it a condition of your mortgage that you have buildings insurance in place. If you are buying a leasehold property, the buildings insurance is normally covered in the lease. Buildings insurance covers the bricks and mortar of the property and the fittings, for example, sanitaryware. Buildings insurance should commence at exchange of contracts for house purchases because that is when you are legally committed to buying the property.

We strongly recommend contents insurance. Although not compulsory, your home is characterised by the items you put in it, so you should want to protect these too. Typical examples of areas covered by this policy include carpets, curtains, televisions, videos etc.

Cover for buildings and contents insurance can usually be upgraded to include accidental damage to the property and its contents, so if you drop your television for example, the insurance company would replace it.

Click here for details of our buildings and contents insurance.


back to top

What happens if I cannot pay my mortgage?

Before buying a property or raising money on your home, it is important to consider your income and outgoings to ensure you can afford your mortgage repayments now and in the future. It is difficult to predict what may happen in the future but you should look at mortgage repayments on our standard variable mortgage interest rate and above to see what the impact would be.

We will give you an illustration of mortgage costs based on our standard variable mortgage interest rate when you apply for your mortgage.

You should also consider how you would pay your mortgage if you are ill or made redundant. You can protect yourself and your family by taking out cover to pay your mortgage in the event of death, accident, illness and unemployment.

back to top

Life assurance and income protection

Life assurance is not an automatic feature of your mortgage, unless you have an endowment policy in place. If you have any other kind of mortgage, you should consider taking out a life assurance policy to ensure your family is protected in the event of your death.

Income protection is a longer term insurance, which is tied to your salary rather than your mortgage (for example critical illness cover, permanent health insurance). It does not cover unemployment but does cover inability to work due to ill health. Many people consider what may happen to their family should they die but do not consider what may happen if they could not work due to ill health.

We have an association with Liverpool Victoria, which enables us to give you advice on your life assurance; mortgage and income protection needs. You may already have some or all of these policies in place but it is important to review them to ensure they still meet your needs and are still competitively priced.

Click here for details of our financial planning service through Liverpool Victoria.

back to top

Changes in circumstances

However carefully you plan, circumstances change. If your circumstances change during the term of your mortgage for reasons such as illness, redundancy or relationship breakdown, it could have an adverse effect on your ability to pay your mortgage. If you do experience difficulties, you should contact us at the earliest opportunity.


back to top

Mortgage payment protection insurance (MPPI)

MPPI is a simple and low-cost way of protecting your mortgage repayments should you be unable to make your monthly commitment due to accident, sickness or redundancy. Don't think the state will cover you. For the first nine months of unemployment, you will be on your own, the state will contribute nothing towards your mortgage. It's not just unemployment you are covering, it's accident and sickness too. You may have cover at work (unless you're self-employed) but it may not cover you for long. A small premium each month is easier to pay when you are receiving an income than your full mortgage payment if you should find yourself unable to work.

Click here for details of our MPPI policy.


back to top

Borrowing extra on your mortgage

You can borrow more money by taking out a further advance with us at a later date. This is a special kind of loan, which usually does not require a solicitor. Most people borrow extra money to do home improvements but we can lend for other purposes. Please see our section dedicated to existing borrowers.


back to top

What do I need to consider if I am Buying to let a property?

Buying a property to let is very different to buying a home for yourself. There are several things you need to consider before becoming a landlord.

back to top

Research the market

Speak to letting agents in the area in which you are looking to buy to find out whether there is a demand for rental properties and how much income you can expect. The agent should be able to tell you the most popular types of properties to let and areas for tenants.


back to top

Investment return

Whatever your reasons are for Buying to let, you will want to make a return on your investment. You will therefore need to know what factors may have a positive or negative impact on your investment. There is no guarantee on the level of investment return you will receive. The type of property, furnishings, tenant, agent and economic conditions all affect the level of rent achieved.


back to top

What are the risks?

Demand for rental property can fluctuate and, of course, the value of your property could fall or rise. If rental demand falls then you may have periods where your property remains empty. There could be other reasons why you may not be able to rent your property, for example, if the rent is set too high or the location is wrong. That is why it is important to do your research before entering the landlord market.

back to top

What tenants are acceptable?

In general terms, we accept employed persons, couples and family units. We do not lend to landlords who have Department of Work and Pensions (formerly DSS) tenants or students because the risk is different and generally higher.

back to top

How do I find a tenant?

Most lettings agencies offer a service to find tenants. They will advertise your property, conduct viewings and undertake referencing of prospective tenants. Once the contracts are signed, you take over management of the tenancy, or you can sometimes pay an agent to also do this for you.

If you ask an agent to manage your property, they should be a member of ARLA (Association of Residential Letting Agents). You will pay 10 to 15% of your gross rental income to a letting agent to manage your property but they will know the local rental market, help you find suitable tenants, draw up tenancy agreements, collect rent and notify your lender if tenants change.

You can get details of ARLA registered agents by telephoning ARLA on 01494 431680.

back to top

Which properties are acceptable?

The property you choose must be suitable for letting, in an area where there is a good demand for rented property. It also needs to be within a 60 mile radius of Newbury, the area in which we know the rental market best.

We do not lend on freehold or ex-local authority flats or multi-occupancy properties. Freehold houses and leasehold properties (with at least 30 years remaining at maturity of the mortgage) are suitable.

back to top

What are the tax implications?

We cannot advice you on this because we are not specialists and the tax implications will depend on your particular circumstances. Rental income is taxable. We advice you to get professional tax advice from a tax specialist.

back to top

The tenancy agreement

You and your tenants will need to sign an assured shorthold tenancy agreement of six or twelve months. The terms within the agreement will protect both parties. You may wish to seek legal advice about the clauses contained in the tenancy agreement.

back to top

Is there anything else I need to know?

You need to be aware of your legal responsibilities as a landlord. This includes repairs to the property, compliance with fire safety regulations and the safety of gas and electrical appliances. You may also want to take legal advice on landlord and tenant law to familiarise yourself with the do's and don'ts of letting a property.

We advice you to read the leaflets 'Thinking of Buying a Property to Let' and 'Buying to Let' produced by the Council of Mortgage Lenders (CML). These can be obtained from Newbury Building Society's head office or the CML, 3 Savile Row, London W1S 3PB (or on their website www.cml.org.uk).

Please also refer to our buy to let products for specific terms and conditions.

back to top

Customer satisfaction

We want to satisfy our customers every time but we realise that sometimes things go wrong. If you are not satisfied with some aspect of our service, then let us know and we will do our best to put things right.

We have an internal complaints procedure, which tells you how we deal with complaints. A copy of our complaints procedure is available on our website or from any of our offices.

It is our intention to settle all complaints promptly and fairly. Most complaints we are unable to settle may be referred to the Financial Ombudsman Service. Before your complaint can be referred to the Financial Ombudsman, it must have been through our internal complaint procedure
back to top

what else do I need to know?

In addition to 'Mortgages explained', please refer to:

You will receive these documents when you enquire about your mortgage or when you receive your formal mortgage offer from us.

back to top

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.