This part of the site is dedicated to giving you information about Mortgages, Insurance, Buying a Home and letting you know how everything works.

The information you will find, is independant and comes from Websites, such as Money Made Clear by the FSA.

How Mortgages Work

A mortgage is a loan to buy your home.  You borrow money money and pay it back with interest over a period of time (the 'mortgage term') that you agree with the lender - usually a bank or building society.

The loan is secured against your home so if for any reason you cant repay it, the bank or building society can sell you home to get back its money.

How Much can you borrow?

This depends on your personal circumstances, such as your income, your outgoings and whether you're buing alone or with a partner.

How to repay your mortgage.

You can pay your mortgage back in the following ways:

• Repayment - your monthly payment is split between paying off the loan and paying off the interest you owe on the loan;
• Interest-only - your monthly payment pays only the interest charges on your loan, and you must arrange some other way to repay the loan; or
• A combination of the two.

The standard mortgage term is 25 years, but you can choose a different term if it suits you and the lender agrees that you can afford it.
With a shorter term, you'll have higher monthly payments but pay less in total.  With a longer term, you'll pay less each month but more in total.
Beware of having a mortgage term that continues past the age that you retire unless you're sure you'll be able to afford the payments then.

Mortgage features and interest-rate deals

Once you've decided how to repay your mortgage, you can choose from different mortgage features and interest-rate deals.

Where to get help

South Wales MGI Ltd are regulated by the FSA and are appointed representatives of the Mortgage Times Group.  This means that we meet certain standards set by the FSA, so you get the advice or information you need to help you make an informed choice.

Most Buy-to-Let mortgages are not regulated by the FSA.

Key Points

• The FSA regulates the way mortages are sold, you can check that we are regulated by cheking the FSA's website http://www.fsa.gov.uk/register/home.do
• You are responsible for paying back your mortgage - think carefully about which repayment option will suit you.
• If you get into arrears (fall behind with your payments), the lender can, as a last resort, sell your home to get it money back.
• Always read your KeyFacts document you'll be given - they have important information for you.

Key Things to Think About

How much you can borrow

Lenders should lend responsibly.  This means that they should consider whether you can afford the mortgage repayments now and throughout the mortgage term.  For example, some lenders offer a discounted rate to start with, but will you be able to afford the repayments when the discount ends?

Mortgage lenders have in the past offered to lend 3.5 times your salary (before tax).  So if you earn £25,000 a year, you could borrow £87,500.

If your buying as a couple, lenders would normally:

• multiply your joint total salary by 2.5.  So say you earn £25,000 a year and your partner earns £15,000, you could borrow £100,000; or
• Multiply the highest annual income by 3.5 and add the second person's annual income.  So using the amounts above, you could borrow £102,000

If you have other money coming in, such as bonuses, overtime or commission, lenders may include only half of this because it isn't guaranteed income.

Recently it has become more common for lenders to make an affordability assessment when calculating how much they will lend you.

Each lender has its own method, but generally they all try to calculate your disposable income, taking account of:

• Your total income;
• Any money you owe, such as loans and on credit cards; and
• Household bills and living expenses.

You can use our online mortgage calculator to find out how much your monthly mortgage repayments may be.  This can help you estimate the size of mortgage you can afford at a particular interest rate.

Self-certification

Usually, the lender needs proof of your income, but sometimes they will rely on what you say your income is (self-certification).  For example, they may do this if:

• You are self-employed and your income varies;
• You find it difficult to prove your income; or
• Your earnings are made up largely of non-guaranteed commission

Key points

Don't be tempted to overstate your income to get a very large loan because you could end up with a mortgage you can't afford and could lose your home your home; you'll also be committing fraud and could get a criminal record.

How to Repay Your Mortgage

You canchoose to pay your mortgage in the followng ways:

• Repayment;
• Interest-only; or
• A combination of the two.

Repayment (also called a 'capital-and-interest' loan)

The paments you ake t the lender every month reduce the amount you owe as well as paying the interest on the loan.  So each month you pay off a small part of your mortgage.

It's a simple, clear approach - you can see your loan getting smaller.  If you make all the agreed payments, the loan will be fully paid off by the end of he term.

However, in the early years your payments will be mainly interest, so if you want to repay the mortgage or move house, you'll find that the amount you owe won't have gone down by very much.

Interest-only

As the name suggests, your monthly payment only pays the interest charges on your loan - you don't reduce the loan itself.  Because you're only paying off the interest your monthly payments will be lower than an equivalent repayment loan.  It's very important you arrange some other wayto repay the loan at the end of the term, for example, through an investment or savings plan.

Make sure you know from the outset how you intend to pay off the loan.

Examples are to:

• Save regularly - so you build up a lump sum that will pay off the loan at the end of the term. You shold check the progress of the plan regularly.  If it doesn't grow as expected, you will have a shortfall and you'll need to think about ways of making this up.
• Convert later to a repayment mortgage - this might be a suitable option if, say, your earnings are low now but you expect them to be much higher in future.  However, because you're putting off repaying the loan you will end up paying more interest and more in total for your mortgage over the term.
• Use a lump sum from somewhere else - say, an inheritance, or selling somthing such as another property or a business.  This may be risky - for example, how sure are you that you will get an inheritance, or what happens if your business fails?
• Sell the mortgages property to pay off the loan - this is suitable only if you won't need to live in the property - for example, if it is a but-to-let property or a second home, or you are buying something smaller or cheaper.

Think carefully about using an investment or savings plan to build up the money you need to repay the mortgage.

An investment plan in the stockmarket and the value of your investment can go up and down.  If you are not comfortable with taking this risk, think about a repayment mortgage instead.

So, when choosing a mortgage:

• Check - You borrow what you can afford to pay back - use our mortgage calculator to help you.  Don't be tempted to overstate you income to get a bigger loan.  You could end up with a loan you can't afford.  You'll also be committing fraud and could get a criminal record.
• Check - you understand how 'repayment' and 'interest-only' options work, and what you must do to ensure you pay off your mortgage at the end of the term.
• Check - you understand the interest-rate deals on offer, and their advantages and disadvantages.  Make sure you know when a special deal will end, and think how you will make your repayments when they do increase.
• Check - you get Keyfacts documents (South Wales MGI will always give you a copy of this and talk you through it) from your advisor or lender.  These contain important information that we require the firm to give you about their service, and the costs and features of the mortgage.

Buying with advice

South Wales MGI are regulated by the Financial Services Authority and our staff will always give you avice about mortgages and insurance policies.  You have a right to expect the advisor to recommend only products that are suitable for you.

If the product that is recommended is usuitablefor your specific needs and circumstances based on the information you gave us, you can complain to the Company and expect compensation for any loss.

Information you will get

You should be given two 'keyfacts' documents.  This information is important because it explains the service you will receive and helps you compare products.

When South Wales MGI initially speak with you we will provide you with a 'Keyfacts' Initial Disclosure Document.  This document explains the service being offered.  You can use this document to help you shop around to choose the service you want and the firm you want to deal with and whether:

• You'll have to pay for it - and if so how much;
• The firm offers products from all companies, a limited number of companies, or a single company.  If you want information or advice based on the full range of schemes, choose a firm that offers products from all companies; and
• That the firm offers advice.  Not all firms do.  If you want advice make sure that the firm can provide this service before making an appointment.

Use this documentto help you shop around to choose the service you want and the firm you want to deal with.  Advisors that work for South Wales MGI will always offer you an adviced based service.

When we have found a mortgage for you, South Wales MGI will give you a Keyfacts illustration or KFI.  You will get a KFI if you ask for a written mortgage quotation, whether or not you choose to get advice.  It summarises the most important features and costs of the mortgage in a standard way so you can compare it with other similar mortgages.

To help you shop around, ask for a KFI when you know how much you might want to borrow and the type of mortgage you want.  By comparing KFI's for different mortgages you can work out which one is best for you.

Your lender or mortgage advisor must always give you a KFI before you apply for a mortgage, so you can make sure it's right for you.  South Wales MGI will always give you a KFI, if you are looking at an interest only mortgage, you will be given a repayment KFI as a comparison.

Buying without advice

You don't have to take advice, but if you don't and the mortgage you choose turns out to be unsuitable, you will have fewer grounds for complaint.

Poor credit history

Whether or not you take advice, the KFI must say if the mortgage is designed for someone with current or previous financial difficulties.  Each lender considers mortgage applications in its own way, and it may look at a number of factors.  For example, many lenders will ignore minor credit problems in the past if all other aspects of your application are good (such as your employment history, income, and record of making mortgage or rental payments).

Key points

Look out for 'Keyfacts' documents

• They're important - read them.
• Make sure you understand them - ask questions about anything that's unclear.
• Use them to compare the services and the products of different firms.
• If the advisor or lender doesn't give you these document, ask for them.

Fees and costs

Buying a house is always expensive, but the costs of getting a mortgage can vary between products and providers. South Wales MGI will use our sourcing system to make sure you get the best deal available.  All the mortgage-related fees you must pay are set out clearly in the KFI (which the advisor from South Wales MGI will give you.  But the KFI won't include other costs such as stamp duty land tax or your conveyancing fees.

Below are some of the fees you can expect to pay

Adding fees to the mortgage

Often you can add some fees charged by the adviser and lender to the mortgage.  This means that you don't have to pay these fees at the time.  But it will cost you more in the long run as you will pay interest on the fees.  If you want to do this ask your lender or advisor to give you a KFI on this basis.  Or if they have already done so, ask for a KFI where the fees aren't added so you can see the difference.

Compare the costs id the Overall cost of this mortgage and what you will need to pay sections of the KFI before you decide what to do.

Incentives

Lenders sometimes offer incentives that reduce the cost to you of taking out a mortgage, such as free valuation or payment of legal fees.  Always compare the total costs of mortgages that have these incentives with those that don't.  You may find that products without incentives have a cheaper rate and will be cheaper in the long run.  Check the additional features section of the KFI to see what incentives are on offer.

Insurance

You can buy many types of insurance with a mortgage.  Your advisor or lender may try to sell you a range of policies.  You must have dome to get the mortgage, some are optional and others may depend on your circumstances.  The FSA regulate the sale od most typeof general insurance.

Buildings Insurance

Most people need buildings insurance to cover their hme in case the building is damaged or destroyed while they have a mortgage.

If you buy a leasehold property (such as in a block of flats), the freeholder may have arranged buildings insurance for the whole block, in which case you may not need your own buildings policy.

Some lenders insist they arrange your cover.  This is called tied insurance.

Others insist you take insurance but you don't have to arrange it with them.  This is called compulsory insurance.  If you decide to arrange your own cover, check whether the mortgage company will charge you a fee for doing so.

The Insurance section of the KFI shows you if you must have tied or compulsory insurance, and other relevant information.

Other insurance

There are various types of insurance that will pay off your mortgage or meet the monthly payments if something unexpected happens, such as you have an accident, get sick, lose your job or die.

Whether they are right for you depends on your personal circumstances - ask your advisor for mre information.

You will probably want contents insurance to cover your furniture and possessions against loss, theft or damage.  For more information about different types of insurance, ask your advisor or visit the insurance section on our website.

 Call 02920 811825 for further details