Security for any mortgage granted will be as follows:
- A Standard Security (Scotland) / First Legal Charge (England) will be taken over the property being purchased as security for the mortgage borrowing.
- Parental Guarantee from the parent(s) acting as guarantor for borrowing. Please note the guarantee could be for a limited amount or to cover the full mortgage.
- Parental Letter of Support for monthly payments – required to support any borrowing above normal affordability on the applicants own income.
It is a requirement that the guarantor takes independent legal advice to ensure they fully understand the legal obligation of providing a guarantee.
Early Repayment Charges
If overpayments of 10% or more of the loan amount are made in any 12 month rolling period during the initial period, and depending on which mortgage your customer has, the following charges will apply:
- For our 3-year mortgage, the charge will be equivalent to 3% of the outstanding balance amount in year 1 and 2 and 2% in year 3.
- For our 5-year mortgage, the charge will be:
o 5% of the outstanding balance in the 1st year
o 4% of the outstanding balance in the 2nd year
o 3% of the outstanding balance in years 3 & 4
o 2% of the outstanding balance in year 5
After the initial period, the Society will not make an early repayment charge if the mortgage is on Standard Variable Rate and is repaid. However, there will be certain redemption fees that will need to be paid (see our Details of Charges leaflet for more information).
Where Early Repayment Charges apply to any of our mortgages, we may allow overpayments (normally up to 10% of the outstanding balance in any rolling 12 month period) without penalty.
Once any period where Early Repayment Charges are applicable has ended, capital reductions can be made without limit or penalty to reduce the balance of the mortgage.
We’ll need evidence that buildings insurance for the property is in place before we can release funds.
Check our Packaging Requirements for full details of documents needed for mortgage applications.