M O R T G A G E S

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S A V I N G S

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I N S U R A N C E

A Guide to your Mortgage

Always with your interest at heart

Contents Introduction 4 Mutuality 4 Where to begin

5 6 6 6 7 8 9 10 10 10 10

What happens next?

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Step 1 Issuing the Mortgage Offer Step 2 Protecting your home Step 3 What the solicitor does Step 4 Agreeing the completion date Checklist to help the move go smoothly

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After it’s started

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Joint mortgages

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Monthly repayments Interest on your mortgage Interest rate changes Additional repayments Credit reference agencies Your annual statement Early Repayment Charge Service charges Death

Liability for your mortgage Divorce or separation Death

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How much can you borrow? Helping you choose a mortgage Repayment periods Methods of repayment Mortgage types Typical Example Valuing the property New property Legal costs Arrangement fees Insurance

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Other matters

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Service of notices

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Other conditions applying to your mortgage Additional borrowing Letting your property Release of security Repaying your mortgage Personal guarantees Production and storage of deeds Change In personal circumstances Financial difficulties Payment Shortfalls on your mortgage

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Membership of the Society 20 Changing your terms and conditions

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Communicating with you

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Communicating with us

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Protecting you

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Confidentiality generally Data Protection Act Complaints Handling Procedure & Financial Ombudsman Service Telephone calls Bankers’ references Identification Financial services

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Introduction

Where to begin

Furness Building Society is committed to providing its customers with the highest level of service and products.

Buying your own home is probably the most important single purchase you will ever make. We have produced this Guide to help you understand the things which you should bear in mind when applying for a mortgage and also how your mortgage account will work. Please read this booklet carefully.

Furness Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Furness Building Society is on the Financial Services Register under registration number 159624. This booklet sets some general information regarding the way the Society works, to help you understand our relationship with you and the rights which you have.

This depends on two things: • the value of the property, and • your own income

In addition to providing you with written material our staff are always happy to answer your questions and explain any matters relating to your mortgage or any of our products.

Please note the Society can only accept applications from customers paid in UK sterling as we do not offer Foreign Currency Loans.

As part of our commitment to provide the highest level of service we welcome any comments and suggestions which you may have. If you have any comments on the content of this booklet, the terms of a particular product or a general comment or suggestion on any matter please write to our Head of Customer Services at our Head Office at the address below or by contacting any of our branches.

Purpose for which credit will be used The Society will lend to you by way of first charge mortgages for the purposes detailed below: • Purchase or re-mortgaging of land or property located in mainland England, Scotland or Wales. • Further advances on an existing first charge mortgage with the Society for capital raising, home improvement and debt consolidation.

Furness Building Society

The value of the property The maximum amount we will lend you based on the value of the property depends on a number of factors including the mortgage product, what purpose the property is to be used for and your general personal circumstances. Please speak to a Mortgage Adviser for more information.

Mutuality

Your own income How much you earn will affect the amount you can borrow - if you are employed we will ask you to provide recent payslips and P60s. If you are self-employed, we will ask for at least 2 years’ business accounts and/or tax returns.

51/55 Duke Street, Barrow-in-Furness, Cumbria LA14 1RT Telephone: 01229 824560 Email: [email protected]

The Society is a mutual organisation. This means that it is owned by its members. Each member is regarded as a part owner of the Society. Being a part owner simply means that you own a stake or interest in the Society. However, this means that virtually all the personal customers of the Society are also its owners. This is rarely the case in a financial institution which is a public limited company. In their case, most of their customers will not own shares in the institution and many of the shareholders will not have accounts with the institution. This is an important difference because the shareholders of a public limited company expect to bepaid a dividend. However, this will not necessarily benefit the account holders. A mutual organisation, such as the Society, is completely different. As our account holders are also our owners we do not have to attempt to please two different sets of people. Furthermore, because we do not have external shareholders like a public limited company we do not have to pay a dividend to them. This allows us to return the benefits of our success to our members. The Society is committed to remaining a mutual organisation. Our Board of Directors has promised that the Society will manage its affairs to ensure that we strike a balance between the need to maintain adequate reserves and a commitment to return the benefits of our continuing success to our members.

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How much can you borrow?

Your monthly income includes your basic monthly salary plus any regular commission and overtime, and any other regular income from other sources. We will take into consideration any loans, credit cards, hire purchase and other regular outgoings to assess the affordability of your proposed borrowing. As a responsible lender we will only lend you what is considered to be affordable and this will vary depending on your income and outgoings. The Society may take up references from people such as your employer, your landlord or another lender to confirm the information which you have made available when applying for your mortgage. Some people who provide these references make a charge for doing so. You will have to pay any charges. The Society will also obtain information from credit reference agencies. Depending on your personal circumstances, there could be other things we need to see to demonstrate your income - one of our Mortgage Advisers will be able to tell you what we need. All mortgages are subject to satisfactory status reference.

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Higher lending charge If you are taking out a mortgage of more than 80% of the price or value of the property -whichever is lower - then a ‘Higher Lending Charge’ will be incurred. We may use part of this charge to purchase additional security for the mortgage. However, it is important for you to remember that even if we do purchase additional security this will not protect you if your property is repossessed and sold for less than the amount you owe. Even if we make a claim on the additional security, you will remain liable for all sums owing including any interest and costs. Please note that the additional security is only for our benefit. You do not have any entitlement to benefit under some or all of the additional security. In fact, if the provider of the security pays any money to us then they have the right to recover these sums of money from you. This is sometimes referred to as a right of ‘subrogation’. If the Society incurs a loss when selling your property you could be pursued by the Society for the loss or by the provider of the additional security. The Higher Lending Charge does not normally have to be paid by you and will instead be paid by the Society. If this is the case, it will be stated in the Key Facts illustration (KFI) and the Mortgage Offer.

Helping you choose a mortgage

Choosing a mortgage may be your most important financial commitment. That is why Furness Building Society is committed to providing advice to you whether this is in a face to face interview in our branches or over the telephone. Any advice you receive from us will be based on your particular requirements and will relate to suitable products available from us.

Repayment periods

Your mortgage may be repaid over any term from 5 years upwards. Restrictions will apply depending on your age or condition of the property. Should you require a term that extends beyond your expected retirement age we will need to ensure that this will continue to be affordable and meets all the Society’s responsible lending criteria. Affordability will be closely reviewed and proof of your income into retirement will be requested.

Methods of repayment

Repayment With a Repayment mortgage the monthly repayment is split, some of it goes towards paying the interest and some towards repaying the capital i.e. the original amount borrowed. The payments are worked out so that all of the capital will be repaid at the end of the mortgage term. In the early years the payment will be mostly interest but in later years, more and more capital will be repaid each month. It is important to note that a Repayment mortgage does not rely on the performance of a long term investment to ensure that the money borrowed is eventually repaid. As long as monthly payments are maintained during the term the mortgage will be paid off in full by the end.

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Interest Only With an Interest Only mortgage the payment to the Society is purely interest and when the mortgage term ends the original advance that you borrowed still has to be repaid. This is usually done by using the proceeds of a long term investment such as an Endowment, PEP/ ISA - also known as a ‘repayment strategy’. A separate payment is made to the company, providing the long term investment and these premiums are invested on your behalf. After a given period, the policy matures and the ‘capital’ which you owe the Society must be repaid. None of these long term investments are guaranteed to repay this capital. Please note that ISAs replaced PEPs with effect from 6th April 1999. When considering an Interest Only mortgage you need to carefully assess the appropriateness of this to your circumstances now and in the future. The Society may consider other repayment strategies e.g. a property free of a mortgage or any other charges. Only properties located in mainland England, Scotland and Wales will be accepted as the Society does not accept Foreign Currency Loans. The Society will not normally consider Interest Only mortgages without a repayment strategy. It is your responsibility to ensure the long term investment exists and that premiums are being paid or that you have other means of repaying the capital. You will receive notification each year in your Annual Mortgage Statement to remind you of your responsibility to ensure that any repayment strategy remains on track to repay your mortgage. Periodically we may contact you to remind you of the need to track your repayment vehicle performance. Compliance with the terms and conditions of the mortgage contract does not ensure repayment of the total amount of credit, for example if you have an interest only mortgage it is your responsibility to provide repayment of the capital. Part Repayment and Part Interest Only A combination of Repayment and Interest Only. IMPORTANT - It is the borrowers responsibility to ensure that an adequate repayment strategy exists and to check regularly to ensure that the policy is sufficient for this purpose. If the mortgage is not repaid at the end of the selected term, the term may have to be extended or the property sold. Mortgage Term Beyond Retirement If you require your mortgage term to extend beyond your expected retirement date we will need to ensure that this will continue to be affordable to you and meets all the Society’s responsible lending criteria. Affordability will be closely reviewed and proof of income into retirement may be requested. Life Cover Where an endowment policy has been arranged, this will include life cover to repay the capital’ in the event of death. With any other type of mortgage, it is important to consider arranging suitable life cover or other insurance to ensure the mortgage is repaid in the event of death or serious illness.

Mortgage types

Standard Variable Rate The Society’s Standard Variable Rate is a mortgage interest rate which can move up or down at any time. The Standard Variable Rate applies to residential mortgage applications received before 1st May 2014. Mortgage Variable Rate The Society’s Mortgage Variable Rate is a mortgage interest rate which can move up or down at any time. The Mortgage variable Rate applies to residential mortgage applications received on or after 1st May 2014.

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VARIABLE RATE PRODUCTS Discount Your monthly repayments are variable and the interest rate will be set at a pre-determined discount from the Society’s underlying variable rate for an initial period eg 2 or 3 years. Your monthly repayment will increase or decrease in line with the Society’s decision to change its underlying variable rate. At the end of the discounted period your interest rate will revert to the Society’s underlying variable rate. Tracker Your monthly repayments are variable and will track an external rate eg the Bank of England base rate for an initial period eg 2 or 3 years. Your monthly repayments will rise or fall directly in line with any changes in the Bank of England Base Rate. At the end of the tracker period your interest rate will revert to the Society’s underlying variable rate. FIXED RATE PRODUCTS Your interest rate is fixed so your monthly repayments are guaranteed to stay the same for an initial period eg 2, 3 or 5 years. During this time you will be protected from the risk of interest rate rises and have the peace of mind of knowing exactly what you will pay each month. However, you will not benefit if interest rates fall. At the end of the fixed rate period your interest rate will revert to the Society’s underlying variable rate. General When you take out your mortgage we will give you an indication of what your monthly repayments might be once your discount, fixed or tracker rate period ends. This will be based on one of the Society’s underlying variable rates at the time we offer you the mortgage. We cannot tell you the exact amount as we will not know how interest rates will change. However, once this period has ended your monthly repayments will usually increase. If there have been a number of interest rate changes during this time then the increase could be quite large. You may hear this referred to as ‘payment shock’. We strongly recommend that you make sure before you take out one of these mortgages that you will be able to afford the increased monthly repayments. Early Repayment Charges If you choose a product with an incentive it is likely you will pay an early repayment charge if you repay all or part of the mortgage within the incentivised period - Please see section ‘Early Repayment Charge’.

Typical Example

You should be aware of the total amount of credit and the cost of the credit to you when you take out a mortgage. Below is a typical example of the cost of a mortgage on an interest only basis on a 2 year fixed rate.

Types of Valuation Once you have seen the property you like and your offer to purchase the property has been accepted, the property will need to be valued so that the Society can decide on the amount of mortgage to give you. There are four types of valuation report: Valuation Report: This valuation is for mortgage purposes only. It is not a survey and is not based on a detailed examination of the structure of the property. The purpose of the report is simply to allow us to make sure that the property will form adequate security for the mortgage. However, this does not necessarily mean that the property has no defects nor that it is right for you as a purchaser. Furthermore, the fact that we grant a mortgage does not mean that the price you are paying for the property is reasonable. If this valuation is instructed by us we will give you a copy of the report when we make a Mortgage Offer. However, we only do this as a matter of courtesy. Neither the Society nor the valuers accept any legal responsibility to you or any other person for the contents or accuracy of the valuation. Homebuyers’ Report: This is a more detailed inspection where a comprehensive and detailed report on the state of repair and condition of the property is made. It is based on the Royal Institution of Chartered Surveyors (RIGS) House Buyers Report guidelines and covers all areas of the property that can be seen or are easily accessible. Building Survey (formerly called a Structural Survey): Valuation reports are not comprehensive surveys based on a detailed structural examination of the property. If you feel you would like a building survey on the property (perhaps because of its age or location) you should advise the Society and we will be able to arrange this for you. This type of survey is the one most likely to reveal defects which could be expensive to repair and affect the value of the property. Because of variations in the depth of survey to be undertaken, a one-off fee (payable by you) has to be agreed with the valuer prior to instructing the survey. Arranging the Valuation The Society will normally arrange the valuation for you, however if you have already instructed a valuation before you apply for a mortgage we will still have to make sure that it has been carried out by a valuer who is acceptable to us. We will also have to check that the form of the valuation is acceptable for our purposes.

A mortgage of £134,000.00 payable over 25 years initially on a fixed rate for 2 years at 1 . 78% and then on our Mortgage Variable Rate (MVR) of 5.54% (variable) for the remaining 23 years would require 24 monthly payments of £559.90 and 276 monthly payments of £813.12.

This will always involve us at least asking the valuer to address their report to the Society. In some cases, we will require the valuer to produce a report for us as a different format to that which he has produced for you. Some valuers make an additional charge for this and you will have to pay this. We reserve the right not to accept a valuation report which you have already obtained and to instruct a valuer of our choice at your cost.

The total amount payable would be £313,349.28 made up of the loan amount plus interest (£179,349.28) an Application fee of £1,450.00, a CHAPS fee of £20.00, a Valuation fee £195.00, a Legal fee of £105.00, an Insurance Rearrangement fee of £25.00, and a Mortgage Discharge fee of £90.00.

Paying for the valuation You will be responsible for paying for all the fees in connection with any valuation report or survey report. This is the case even if we instruct the valuation or survey for you and even if you do not buy the property which is valued.

The overall cost for comparison is 5.10% APR representative.

The Society’s staff will be able to advise you of the fees for Valuation Reports and Homebuyers Reports and the fees are also stated in the Society’s Valuations leaflet. The Society’s staff can also find out the cost of a Building Survey.

Please note the example above is for a house purchase. 8

Valuing the property

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New property

If the property which you are buying is a new house then the builders will have to: •arrange NHBC cover. This means that they are registered with the National House Builders Council which will rectify certain defects in the property in the first ten years after it is built; or • arrange defects’ cover acceptable to us which is similar to NHBC cover; or • be working under the supervision of a qualified architect or surveyor. In some cases, a mortgage may be advanced in instalments while a house is under construction on the basis that we receive a satisfactory inspection report from the valuer before each instalment is advanced. Where there is no NHBC cover or a satisfactory alternative warranty we will also need certificates from the architect who is supervising the project at various stages confirming that the work has been completed satisfactorily. You must pay for each report and any architect’s certificates. This section also applies if you are building the house yourself.

What happens next? Step 1 Issuing the mortgage offer

Once your mortgage has been approved we will send you 2 copies of our formal mortgage offer, which is a written document confirming the details of the mortgage we are offering you. At the same time we will send instructions to your solicitor giving full details of your mortgage offer, our Terms and Conditions and all necessary documentation. All offers will be binding offers and you will have a 7 day reflection period before committing yourself to taking out the mortgage. ou have the right to waive the reflection period. Should the Society receive any instruction from your solicitor to complete your mortgage we will treat this as you wishing to waive your right to reflect.

Legal costs

You are responsible for the legal fees and outlays incurred by your solicitor for the purchase of your property and preparation of our security documents. These fees should be settled directly with your solicitor who can provide an estimate of the fees and outlays involved. Usually your own solicitor will also be permitted to act for us. This helps to keep your costs down.

What you need to do All applicants should check the mortgage offer then, if acceptable, sign and date one copy and return it to us. The reference number quoted on the offer is your unique mortgage account number and this should be quoted if you have any queries at any time. Please retain your copy of the offer in a safe place.

Arrangement fees

Step 2 Protecting your home

Insurance

It is also important to consider protecting your life and income to ensure that your home is protected in the event or death or sickness.

For some of our mortgage products we may charge you a fee known as an ‘arrangement fee’. We will tell you the amount of this fee and when it is payable. Your mortgage is likely to be the most important financial commitment you make and it is vital that you seriously consider how you protect your property, and you and your family against the unexpected. The Society offers buildings and contents insurance and specialist staff are available to guide you through your options. Buildings and Contents Insurance This type of insurance protects you against damage to your home and/or the contents of your home, such as your furniture and electrical goods. The Society does require you to have at least satisfactory Buildings Insurance in place, although it is not compulsory for you to arrange this through the Society. If you choose to arrange this elsewhere, there will be an administration charge. Please see the Service Charges leaflet for the current fee. Please remember that whilst you hold a mortgage account you agree to keep the property insured to its full rebuild cost. The Society’s requirements will be detailed in your mortgage offer document. The Society earns commission, which is paid to us by insurers once your premium is paid to them. Full details are available on request.

It is essential that you have your property insured, either through the Society or you may arrange your buildings insurance elsewhere.

Building insurance must be maintained throughout the lifetime of the mortgage. Where buildings insurance is not taken through the Society, the solicitor must ensure that buildings insurance is in force for exchange of contracts (purchases) or completion (remortgages) in accordance with the requirements set out in the CML Lenders Handbook.

Step 3 What the Solicitor does

Your solicitor will liaise with the seller’s solicitor to prepare the contract of sale/purchase. Your Solicitor will also explain the legal implications to you before you sign any documentation, and then make all the arrangements to transfer the property into your name. The contracts of sale/ purchase will be ‘exchanged’ between your solicitor and the seller’s solicitor. This is one of the key documents the solicitor will go through with you to ensure all details are correct and that you agree with it. You need to ensure that you speak with your solicitor and that you are aware of any and all fees that may be charged for the purchase/sale.

Step 4 Agreeing the completion date

The completion date is the day when you become the new owners of the property. Your solicitor will agree the day with you and the seller’s solicitor. The solicitor will contact us and we will ensure that, providing we have all the necessary documentation and all mortgage conditions in the offer have been met, the mortgage money is sent to your solicitor. You should arrange with your solicitor for any additional money required for the purchase to be sent in time for completion. You should also ensure that you have arranged for the removals van to be there on the day and all meter readings of utilities are organised. Don’t forget to re-direct your post and transfer your telephone number if appropriate.

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You have a lot to remember when you’re moving house so the following checklist may be useful to you:

After it’s started

Checklist to help the move go smoothly

Monthly repayments

Item Water Gas Electricity Telephone Post office Cable/satellite and internet service providers TV/video rental companies TV licensing Financial Banks Building societies Credit card companies Council tax department National savings and premium bonds Your employer Insurance companies Pension companies Her Majesty’s Revenue & Customs Social security Health Doctor Dentist Optician Motoring DVLA Breakdown recovery company Vehicle registration Vehicle insurance Others Friends and relatives Subscriptions Milk delivery Newsagent Sports club

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Date

Once your mortgage has started we will write to you to confirm the amount of your monthly repayments. We will also tell you when you have to start making your monthly repayments. These are normally made by direct debit. However, you may pay by standing order, cheque or cash.

Interest on your mortgage

We begin to charge interest on your mortgage on the day that we transfer the money to your solicitor, or when the funds are released. We charge interest on most of our mortgage products on the basis known as ‘monthly rest’. This means that interest is charged on the balance at the start of each month. Therefore as your balance reduces so does the interest charged. However, if payments are missed and your balance increases then so will the interest charged.

Interest rate changes

The timing of a change to your monthly payments will vary. (a) We may reduce any rate of interest payable under your mortgage and we may also increaseat any time (whether or not with immediate effect) any rate of interest payable under your mortgage if we reasonably believe that the change is needed for any one or more of the following reasons (which may relate to circumstances existing at the time or which we reasonably expect to apply in the near future): (i) to respond, in a proportionate manner, to changes in the Bank of England Base Rate; (ii) to respond, in a proportionate manner, to interest rates generally charged by our competitors in the mortgage market; (iii) to respond, in proportionate way, to changes in the cost to us of raising the money we lend to our customers by way of mortgage; (iv) to enable us to maintain the competitiveness of interest rates charged to our investors, while having regard to the interests of our borrowers, in the interests of our business as a whole; (v) to respond, in a proportionate manner, to any increase or reduction in costs reasonably incurred by us in operating or mortgage services; (vi) to respond, in a proportionate manner, to changes that have been made or are about to be made, in the law or interpretation of the law, relevant codes of practice, the way we are regulated, or any decision by an Ombudsman, court, tribunal, regulator or similar body; or (vii) it is necessary to maintain our financial strength in the interests of all our customers. (b) We can also change the interest rate for any other valid reason (other than those mentioned in (a) above) where we reasonably believe the change is appropriate. If we do so: (i) we will give you notice of the change by posting or delivering the notice to you under condition 18 before such change is to take effect;

Library Schools/colleges

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and (ii) you can, within 3 months of our notifying you of the change, without having to give us any notice, repay the whole debt without having to pay an early repayment charge; and (iii) we will tell you this and that we are increasing the interest rate in accordance with this condition 4(5)(b) when we give you the notice. (c) The rate of interest will not be charged for any of the reasons stated in conditions (a) or (b) above in a manner which would put customers who have received an incentive in a less advantageous position than a new customer or a customer who is free to redeem their account without loss or repayment of any incentive. We will tell you about rate changes before the date the change takes effect by letter or other personal notice and, subject to these Conditions, any such change shall not take effect on a date earlier than the date specified in your letter or other personal notice.

Additional repayments

You can make additional payments to your mortgage over and above your monthly repayments in order to reduce the capital outstanding on your mortgage. The effect of this can be to reduce the amount of your monthly repayments. If your mortgage is being repaid on the repayment basis you also have the option to retain your current level of repayment thereby reducing the remaining term of your mortgage. We normally require that any additional payment to permanently reduce the capital on your mortgage is at least £500. Please note that where an incentive has been received e.g. a cashback, a discount, fixed or tracker rate an early repayment charge may be payable where you make an additional repayment during the first few years of the mortgage. Where this condition applies we will advise you and it will be stated in the Mortgage Offer and Key Fact Illustration.

Credit reference agencies

When you apply for a mortgage we will make searches about you at credit reference agencies who will supply us with credit information as well as information from the Electoral Register. The Agencies will record details of the search whether or not your application proceeds. Once your mortgage is granted we will disclose information about how you manage your account to credit reference agencies. This will be shared with other lenders and providers of credit when they are considering loan or credit card applications from you. We may make periodic searches of group records, credit reference and fraud prevention agencies to manage your account with us, to take decisions regarding credit, including whether to make credit available or to continue or extend existing credit. The searches will not be seen or used by lenders to assess your ability to obtain credit.

Your annual statement

Early each year we will send you your mortgage statement. This will show: • the total payments which we have received from you during the previous year • the total interest charged on your mortgage for that year • the total of any other transactions on your loan account during the year, which might be the payment of a charge for a service provided by us 14

• remaining term of the mortgage • any outstanding subscriptions • any early repayment charges which may apply

Early Repayment Charge

If you already have a mortgage with the Furness and want to move home, you will have to pay off (redeem) your existing mortgage and will have to pay any Early Repayment Charge if applicable under the terms of your existing mortgage. You would normally have to pay the Early Repayment Charge when repaying your mortgage but it is possible some or all of the Early Repayment Charge can be refunded if you take out a new mortgage with us providing you comply with the conditions set out below. In order to get a full refund of your Early Repayment Charge you must take out a new mortgage with us for the same amount as your existing mortgage and carry forward the existing product terms to your new mortgage. In addition you will have to comply with the lending criteria applying at that time and complete your new mortgage within 6 months of repaying your existing mortgage. If you need to borrow more when you move you can often top up the difference between the portable amount and your new mortgage with one of our other products which is available at the time. If you borrow less than the portable amount, then we can only refund part - on a pro rata basis of the Early Repayment Charge which you paid e.g. if your existing mortgage is £50,000 and you only wish to borrow £40,000 on the new mortgage, 80% of the Early Repayment Charge will be refunded on completion of the new mortgage. The terms applying to the portable amount of your mortgage will depend on the terms applicable to your existing mortgage when your new mortgage completes. If you are still benefiting from a special product on the portable amount i.e. the mortgage is still on a fixed or other rate, then the portable amount must continue on the same interest rate and terms as your existing mortgage for the initial period and on the Society’s underlying variable rate thereafter.

Service charges

We make a charge for certain services which we provide in connection with your mortgage. These are listed in our ‘Service Charges’ leaflet which will be given to you when you receive your Mortgage Offer and at any time if you ask for it. We can alter the charges we make at any time, but we will give you 30 days’ notice. Changes may include the abolition of, or amendment to, existing charges, or the introduction of new charges. Such changes may be made because of circumstances which we reasonably believe exist at that time or which are expected to apply in the near future for any of the following reasons: We can make other changes to our costs (including increasing or introducing new costs) if we reasonably believe that the change is needed for any one or more of the following reasons (which may relate to circumstances existing at the time or which we reasonably expect to apply in the near future): (a) to respond, in a proportionate manner, to any new or increased cost which we reasonably incur in operating your mortgage account:

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(b) to respond, in a proportionate manner, to changes which we may reasonably make in the services we provide; (c) to respond, in a proportionate manner, to changes that have been made or are about to be made, in the law or interpretation of the law, relevant codes of practice, the way we are regulated, or any decision by an Ombudsman, court, tribunal, regulator or similar body; (d) to make our charges operate more fairly between our consumer customers generally; or (e) to enable us to harmonise, in a reasonable manner, charges following any acquisition of mortgage accounts or any takeover merge with another mortgage loan provider. Where we vary a Cost under Condition 6 (5) we will give you notice of the change by posting or delivering the notice to you, or as soon as reasonably practicable, after the change is to take effect. A change which abolishes a charge, or reduces the amount of any existing charge, may be introduced with immediate effect and without notice.

Death

We recommend that you consider arranging a life policy to repay your mortgage in full in the event of your death. In the event of your death we will advise your personal representatives of the amount required to repay your mortgage. There are a number of things which would happen: • your personal representatives repay the mortgage with other money from your estate; • your personal representatives sell your property and repay the mortgage with the sale proceeds; • we sell your property and repay the mortgage with the sale proceeds; or • another person takes over your mortgage and makes the monthly repayments to us. This might happen if you leave your property to another person who wants to live in it. These options also apply if you have a life policy which is not enough to repay your mortgage in full. We will speak with your personal representatives to try to find a way of repaying your mortgage which suits everyone concerned.

Joint mortgages Where two or more individuals take out a mortgage together then the mortgage is usually referred to as being in ‘joint’ names. There are a number of matters which affect joint mortgages which can be important. You should keep these in mind when you are taking out a joint mortgage.

Liability for your mortgage

If you have a joint mortgage then your liability for the mortgage is ‘joint and several’ with the other borrowers. This means that each of you is liable for the whole amount borrowed as though the mortgage was in your name only. If you are unable to maintain mortgage repayments and the account goes into 16

arrears we will try and help you (see section on Financial Difficulties) however, where we are unable to secure repayment of the arrears and as a last resort, the property may have to be repossessed. We will use the sale proceeds to repay the mortgage. However, if the proceeds are not enough to do this then YOU remain jointly and severally liable for the shortfall. This means that you may have to pay some or all of the amount of the shortfall. If you pay it all then you may have certain rights to recover part of this from the other parties to the mortgage. Your solicitor or local advice centre will be able to tell you about this. The Society’s staff will be able to tell you about your liability for your mortgage in general terms. If you would like a more detailed explanation of your liability and our rights to recover the mortgage then you should speak to your solicitor or local advice centre.

Divorce or separation

If you take out a mortgage with your husband, wife or partner then you will remain jointly and severally liable for the mortgage even if you move out of the property because of a divorce or separation. The person who remains living in the property may want to take on the mortgage on their own. However, we will only agree to this if we are happy that they can meet the monthly repayments. If we do not think that they will be able to do so then we will not remove your name from the mortgage and you will remain liable for it. As part of a divorce settlement or separation agreement there may be a court order or other arrangement which transfers ownership of the whole of the property to only one of the parties to the mortgage. However, this does not alter the liability of the parties to the loan for us. We may alter the mortgage as a result of the transfer but this will depend on whether we are satisfied that the person who will be taking on all of the mortgage will be able to meet the monthly repayments.

Death

As recommended in the earlier section we would always suggest that you consider life cover for all parties to the mortgage. If one party to the mortgage dies the remaining borrower becomes responsible for ensuring that the monthly repayments are made. We will remove the deceased borrowers name from the mortgage once we have seen a certified copy of their death certificate. When the last remaining borrower dies we will handle the loan as described in the earlier section on death.

Other matters Other conditions applying to your mortgage

If you take out a mortgage with us to buy a property in Scotland we will take a security over that property known as a ‘Standard Security’. There are conditions which apply to this Standard Security and to your mortgage in addition to the terms and conditions in this booklet. Please ask your solicitor to give you a copy of this booklet when you sign the Standard Security. If you buy a property in England or Wales then we will take a security over it known as a ‘Mortgage Deed’. The additional conditions which apply to this security and to your mortgage are listed in a separate booklet. Please ask your solicitor to give you a copy of this booklet when you sign the Mortgage Deed.

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Whether you buy property in Scotland, England or Wales your solicitor will explain the obligations which you have entered into by signing our security document. Please ask your solicitor if you are unsure about any of the legal matters involved in taking out your mortgage and signing our security documents.

Personal Guarantees

Additional borrowing

Before we take a guarantee from someone we will require them to take independent legal advice so that they understand their obligations. We will also tell them that they could become liable to pay your mortgage instead of (or as well as) you and how much they could be liable to pay. We will not take a guarantee for an unlimited amount, the guarantee will be for the advance amount plus interest and costs. Where the Society is asked to consider a mortgage application and a guarantor is involved, your authority will be obtained to disclose to the guarantor full details of the mortgage application including your own financial information. In addition, your consent will be obtained to enable the Society to contact the guarantor and discuss the conduct of the account with them.

Additional borrowing may be available for existing borrowers wishing to borrow funds for home improvements, repairs and other acceptable purposes. Please speak to the Society’s staff for further details.

Letting your property

If you want to let your property you must get our written consent before you sign a tenancy agreement and allow your tenant to move in. There are certain conditions which we require you to meet prior to letting. These conditions protect your interests as well as ours. You can get a copy of these conditions from our Head Office. If the property is let, the interest rate may increase and you may have to pay an administration fee (details of the fee are in our Service Charges leaflet). We also recommend that you discuss your intentions with your solicitor as he or she will be able to advise you on your rights and obligations. Your solicitor may also be able to draw up a suitable tenancy agreement for you and make sure that any notices which have to be served on your tenants are served at the right time.

Release of security

Production and storage of deeds

You may request that either you or your representative may examine the deeds of your property over which we hold a mortgage or to supply extracts from our copies of such deeds, subject to any reasonable conditions that we may specify. You may have to pay a fee for these services and the fees are shown in our Service Charges leaflet. The fee will be charged to your mortgage and you will be asked to make a separate payment. For Land Registry deeds we do not require pre-registration title deeds. If they are sent to us, we may charge you a fee for providing storage facilities. The amount of this fee is the same as that charged for the release of title deeds.

We may release our charge on any part of the mortgaged property e.g. part of a garden if we are satisfied that the remainder of the property will be adequate security for the balance owing to us. We may impose conditions and may require a revaluation of the property. This will be at your own expense. A fee for agreeing the release of part of the security will be payable in accordance with our “Service Charges” leaflet.

Change in personal circumstances

Repaying your mortgage

Financial difficulties

If you want to repay your mortgage in full you will need to pay us all sums owing in respect of the mortgage including: • our costs and expenses in connection with the repayment; • any interest (in lieu of any period of notice) required under your mortgage; • any of the Early Repayment Charges which relate to your mortgage (you should refer to your Key Facts Illustration and Mortgage Offer for details); • any administration fees required in respect of the work involved in closing your account. You may repay all or part of your mortgage before the end of the term, however, you may have to pay an Early Repayment Charge. We will not impose Early Repayment Charges when the reason for the early repayment is due to the death of one or other of the parties to the mortgage. Please refer to our Service Charges leaflet for the amount of administration fee payable and also read the section of this booklet entitled Interest on Your Mortgage.

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In some cases, we may require that, as a condition of granting you a mortgage, you arrange for another person to guarantee your mortgage. This means that if you are unable to pay your mortgage we can require the person who has granted the guarantee to pay it.

It is very important to bear in mind that a change in your circumstances could have an adverse effect on your finances, e.g. divorce, bereavement, sickness, redundancy. It is vital to plan for this and protect for these eventualities. If you become ill or unemployed or find it difficult to meet your monthly repayments for any other reason, please let us know immediately. If you do this then we may be able to help by developing a plan with you for dealing with your financial difficulties. Please speak to the Society’s staff for help and assistance.

Payment Shortfalls on your mortgage

If you do not pay the monthly instalments or other amounts on your mortgage as they fall due then we will regard your mortgage as having a payment shortfall. The Society will deal with any payment shortfalls which occur fairly, sympathetically and positively and will try and reach an agreement with you to enter into a payment plan to repay the outstanding amount. Repossession of the property will only be considered as a last resort, but if we have to re-possess your property an administration charge will be made. There may be charges which are incurred whilst the payment shortfalls are outstanding and details of these are in our Service Charges leaflet. You can get this at any of our branches or from Head Office or on our website www.furnessbs.co.uk 19

In addition to our charges, you will also be responsible for any legal and other costs which we incur. Where you have missed payments you will also have to pay interest on the payments which are outstanding. The rate which we use to calculate this interest is usually the same as the normal rate which apples to your mortgage. Please also read the section entitled “Interest on your Mortgage”.

Service of notices A letter or other personal notice will be deemed duly served 24 hours after posting. If we, accidentally, fail to: • send to you a communication intended for our borrowers generally or category of our borrowers of which you are one, or • display a notice at our Head office or any branch office. This will not make the notice invalid.

Membership of the Society As we have explained earlier in the section entitled ‘Mutuality’ the Society is a mutual organisation. This means that most borrowers who are individuals are regarded as owning a stake in the Society. They are usually referred to as ‘members’ of the Society. The position is slightly more complicated where the mortgage is a joint mortgage. Both borrowers are members of the Society. However, in terms of our rules, notice of meetings (such as our Annual General Meeting and any Special Meetings) is sent only to the address which we hold for the person whose name appears first on the mortgage and only this person may vote. You may choose who is to be named first on your mortgage when you take out the mortgage. In the case of joint borrowers, on the date of death of the person first named on the mortgage account, the surviving borrower will become the person entitled to receive notice of and vote at meetings. Where a loan is in the name of more than two individuals, on the date of death of the person first named, the survivor will become the Representative Joint Borrower.

Changing your terms and conditions We may change the terms and conditions which apply to your mortgage for one of the following reasons: • to make them easier to understand and fairer to you • to reflect a change in market conditions • to take account of a decision of a court, Ombudsman or regulatory body • to take account of changes in the law, codes of practice or our own rules • nto allow us to take advantage of changes in technology for your benefit

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Communicating with you

We recognise that it is important that we keep you advised of changes. We shall keep you informed of changes in: • the terms and conditions which apply to your mortgage • the interest rates which apply to your mortgage • increases in any of the charges which appear in our Service Charges leaflet We will give you reasonable notice of these changes. The exact amount of notice will depend upon the type of change and the circumstances surrounding the change. We will notify you of these changes in at least one of the following ways: • by writing to you • by newspaper advertisement • by displaying posters and leaflets in our branches If there have been significant changes in any one year to the terms and conditions which apply to your mortgage then we will give or send you a copy of the new terms and conditions or a summary of all the changes.

Communicating with us Please let us know if you think that there are errors on your annual mortgage and insurance statement. Our staff will also be happy to explain any queries which you may have about your statement. Please contact your local branch or Head Office as soon as possible if you have financial difficulties. If you discuss your situation with us we may be able to develop a plan with you for dealing with your financial difficulties. Please also tell your branch or our Mortgage Department at Head Office about anything which you feel is important. This might be about your mortgage in particular or any of our products or terms and conditions in general. Do please tell us if you are not happy about some aspect of your mortgage or our service. We cannot deal with problems or shortcomings if we do not know about them.

Protecting you Confidentiality generally

Because of your relationship with us, the information which we hold about you in order to manage your mortgage is private and confidential. We recognise this and all our staff are trained to ensure that the information which we hold about you is not disclosed to anyone unless you have agreed to this or the law allows us to do so.

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In terms of the general law there are only four situations in which we can disclose information about you. These are: • where we are compelled by law to do so, • where there is a duty to the public to disclose, • where our interests require disclosure, or • where you have requested or agreed to the disclosure.

Data Protection Act

Your personal information is also protected by the Data Protection Act in respect of information which we hold. The Act requires us to register the ways in which we use the information which we hold about you with the Data Protection Officer. The Registrar is an independent official whose job it is to see that organisations such as the Society comply with the Act. The Society has also appointed its own Data Protection Officer to liaise with the Data Protection Registrar and to ensure that we continue to comply with the Act as the ways in which we conduct our business develop and change. For the purposes of the Data Protection Act 1998 the Society is the data controller responsible for the processing of your personal data. Under data protection legislation you have the right of access to your personal records held on file. A charge may be made by the Society for the administration involved in providing the information. Your personal details will only be released to third parties where the Society is legally compelled to provide the information, where there is a duty to the public to disclose or where the interest of the Society require disclosures. In other cases disclosure will only be made at your request or with your consent. If you would like any further information on the Act please contact your branch or our Head Office.

Complaints Handling Procedure & Financial Ombudsman Service Complaints At the Furness, we always try to provide a first-class service. Occasionally, however, things can go wrong and if they do, we’ll make every effort to put them right. Ways to contact us If you have a complaint, you need to contact to someone who understands your concerns. You should contact the relevant branch or agency or Head Office department by calling Furness Direct on 0800 834 312 or 01229 824560. You can also e-mail us at [email protected] or write to us at 51-55 Duke St, Barrow-in-Furness, Cumbria LA 14 1 RT. The Society has a complaints handling procedure and a copy is available on request.

Some complaints take longer to resolve and under the rules which govern how we handle complaints, we have 56 working days (around 8 weeks) to complete the process, however, we are committed to resolving complaints as soon as possible. We will write to you to acknowledge that we’ve received your complaint, confirm the next steps and provide you with the contact details of the person handling it. When we have completed our thorough investigation, we will write to you with a final response, that will include what we have looked at, what we have found out and our decision. Financial Ombudsman Service We hope that the final decision you receive will provide you with sufficient information to explain the investigation and how we came to our decision, however, If you are not satisfied with the outcome, you can refer it to the Financial Ombudsman Service (FOS) and ask them to look into it for you. We will send you a leaflet that explains the FOS procedure with our final response. If you decide to refer your complaint to FOS, you must do so within 6 months of our final response. The contact details of the Financial Ombudsman Service are: The Financial Ombudsman Service, Exchange Tower, London E14 9SR Telephone: 0800 023 4 567 or 0300 123 9123 Website: www.financial-ombudsman.org.uk Online Dispute Resolution (ODR) The European Union has an Online Dispute Resolution platform that may assist customers in resolving disputes about products and services bought online. This is another platform to resolve disputes via the Financial Ombudsman Service (FOS) in addition to a customer’s existing right to contact FOS directly. The ODR can be accessed at the Online Dispute Resolution section of the European Commission website at https://webgate.ec.europa.eu/odr/main/index. cfm?event=main.home.chooselanguage. Please note that if you choose to submit your complaint in this way, it will be forwarded to the Financial Ombudsman Service. If you use the ODR platform, when you complete the form, please include the following email address as our contact point: [email protected]

Telephone calls

Your call may be monitored or recorded to maintain a quality service.

Bankers’ references

If a third party asks us to provide them with our opinion of your financial status or your ability to meet certain financial commitments we shall not do so unless you have agreed to this in writing. A charge maybe made for this.

Identification

Before we give you a mortgage we have to check your identity. We are required by law to do this in terms of regulations designed to detect and prevent money laundering by criminals. These checks help to protect both you and us. Our leaflet will tell you what kinds of identification are acceptable. You can also ask at any of our branches, or visit our website www.furness-bs.co.uk

What happens next? We will record your complaint and work hard to resolve it within 3 working days, starting from the day after we received it. If it is possible to resolve your complaint within this timescale, we will send you a letter to confirm this. Please note that in most cases we will contact you by telephone to discuss your complaint so it’s important to note that our call will not display a phone number, it may display e.g. No Caller ID.

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP THE REPAYMENTS ON YOR MORTGAGE 23

For more information or details about our mortgages • call in at your local branch or agency • call Furness Direct on: 0800 83 43 12 • visit our website www.furnessbs.co.uk • email us at [email protected]

Furness Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Furness Building Society is on the Financial Services Register under registration number 159624. The Society is covered by the Financial Ombudsman Service and has a complaints handling procedure. A copy of the complaints handling procedure is available on request. Complaints we cannot settle may be referred to the Financial Ombudsman Service. Your call may be monitored or recorded to maintain a quality service.

Head Office: Furness Building Society 51-55 Duke Street Barrow-in-Furness Cumbria LA14 1RT Telephone: (01229) 824560 Facsimile: (01229) 837043 Mor/Guide/09-16