Regulated mortgage contract
The Financial Conduct Authority (FCA) has a very strict definition of the mortgages that it actually regulates. In order to qualify as a regulated mortgage contract, the following conditions have to be met:
- a lender provides credit to an individual or to trustees (the 'borrower');
- the obligation of the borrower to repay is secured by a first legal mortgage on land (other than timeshare accommodation) in the United Kingdom, at least 40% of which is used, or is intended to be used, as or in connection with a dwelling by the borrower or (in the case of credit provided to trustees) by an individual who is a beneficiary of the trust, or by a person who is in relation to the borrower or (in the case of credit provided to trustees) a beneficiary of the trust, i.e. spouse, partner or parent, brother, sister, child, grandparent or grandchild.
Other loans, including buy-to-let mortgages and equity release home reversion schemes are not covered by the FCA's umbrella although equity release lifetime mortgages will be regulated.
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