The new regulations require lenders to produce a Key Facts Illustration (KFI) to show the total amount of money payable over the full term of a mortgage. The following simple illustration highlights the type of information that can be obtained from a KFI, showing the substantial savings that can be made when choosing a lender with competitive deals and a low ongoing variable rate.
Nationwide believes that looking at the true cost of a mortgage, as detailed in the new KFIs, is a much more realistic way of comparing mortgages than simply looking at headline rates in the best buy tables. Nationwide executive director, Stuart Bernau, says that these rates can be misleading: “Simply focussing on headline rates does not necessarily give the consumer the true picture of how much a mortgage costs. The KFI however, has a lot more information. It details the headline rate, all fees, the total amount payable, the amount payable per pound borrowed and the monthly payments. We believe that borrowers should not have to change lenders every few years in order to get a good deal and the KFI shows that with Nationwide it is possible to get long-term good value from one lender. Not only do we have a very competitive BMR, but we also offer all of our rates to both new and existing customers.”
The KFI allows borrowers to compare details of mortgages from other lenders and contains the following information:
- Description and overall cost of the mortgage
- Details of monthly payments
- Warning of the risk of rising interest rates or falling income
- Fees and early repayment charges
- Details of insurance options and costs
- Explanation of flexible features such as overpayments and payment holidays
