Effective from 14 August 2007

New Mortgage Account Fee

Summary

From 14 th August, for new mortgage applications a new fee will be payable called the Mortgage Account Fee.

The Mortgage Administration fee that is currently payable on redemption will no longer apply to new business from this date.

What’s changing?

The Mortgage Account Fee is £225 and is for providing, maintaining and general administration of the mortgage and is payable on completion. T he benefit of these changes to the customer is that they can now choose to pay the fee on completion and therefore not incur RPI increases.

T o help customers with their finances, the fee can be deferred until redemption. If deferred, the amount we charge will be £225 plus or minus any annual increases or decreases in the published Retail Price Index, up until the fee has been paid. The first increase or decrease of the Mortgage Account Fee will be calculated thirteen months from completion and annually thereafter up until the time the fee has been paid. Therefore, if inflation (measured by Retail Price Index) is 3%, the Mortgage Account Fee will be increased as follows:

The wording used on the KFI to explain this is;

A Mortgage Account Fee is payable on completion or deferred until the end of your mortgage. If you defer the payment , this fee will increase or decrease annually by an amount, which does not exceed this amount multiplied by the average rate of increase in the published RPI over the preceding twelve-month period.

What You Need To Do

From 14 th August 2007, inform your customers making Mortgage Applications that their mortgage offer will be subject to the new Mortgage Account Fee. Please give the customer a copy of the Straightforward Guide to your Mortgage, as this includes details of the new fee and their payment options. Confirmation of this will be included in their Offer KFI and in the Terms and Conditions that will be issued to them.

Pipeline & Amended applications:

Pipeline and applications, which require amendment after the 14th August 2007 will have the new fee applied. You may need to re-issue a KFI where the KFI was issued prior to the 14 th August but where the application has been transmitted or amended after the 14 th August, this will ensure that the new fee is disclosed.

Important Note:

Abbey is unable to collect the fee at this time. To ensure customers are not disadvantaged by this, they will receive further information and a tear off slip in the Offer documentation. If they wish to pay the fee on completion, they will be required to return the tear off slip to Abbey. We shall write to these customers again in 2008 to remind them about their choice regarding payment of the Mortgage Account Fee and requesting payment of the original amount of £225.

If customers do not return this tear off slip the fee will be deferred until the end of the mortgage . Please ensure that customers are aware of the importance of returning this slip if they wish to pay the fee rather then deferring payment.

The latest versions of the following literature are now available within the literature section on this site for intermediaries to view, print or download. Alternatively, to find out more speak to your Abbey for Intermediaries sales consultant or call 0870 6000 367.

The Lending Guide for Intermediaries
Standard Mortgage Tariff of charges
Straightforward guide to your mortgage