A Key Facts Illustration, also known as a mortgage illustration, is a document that you must be provided with before you make a decision to take out a mortgage. It provides important information about a mortgage in a standard format, so that you can easily compare different mortgage products from different lenders.
The key facts illustration is designed to help you understand the features, benefits, costs and risks of the mortgage before you decide whether to go ahead.
What can you expect to find in a Key Facts Illustration?
- The Lender’s Details: Information about the lender, including their contact details.
- Loan Details: How much you want to borrow, the mortgage term, the interest rate type (fixed, variable, tracker, etc), the total amount payable over the term of the loan, and repayment method (repayment or interest-only).
- Interest Rate: The interest rate or rates that apply to the loan, what they mean in terms of monthly payments, and what could happen if interest rates go up or down.
- Monthly Payments: How much your monthly payments would be at the start of the mortgage and whether and how these could change over time.
- Fees and Charges: Any fees you must pay before and after the mortgage starts and whether these are refundable, and information about other costs, such as valuation fees or early repayment charges.
- Features: Any special features of the mortgage, such as the ability to overpay or take a payment holiday.
- Insurance requirement. Whether there are any requirements to take out insurance on the property as a condition of the mortgage, such as a particular type of buildings insurance.
- Risks: Potential risks you need to be aware of, for example, what could happen if you don’t keep up your mortgage repayments or if you want to pay off the mortgage early.
- What happens if you cannot pay: Information about what would happen if you were unable to pay your mortgage, including details about repossession.
The Key Facts Illustration aims to make it easier to compare different mortgages side by side, to ensure that you’re making an informed decision and choosing the best mortgage product for your needs.
For an example of a Key Facts Illustration see this example PDF from the FCA
For details of the FCA rules on what has to be in a mortgage illustrations See the FCA Handbook, Mortgage code of business