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Mortgages Deed / Legal Charge

This is the legal document establishing that you have a mortgage on your home or property.

Mortgage Indemnity Guarantee (MIG)

This is known under many different names which include the following; High Percentage Lending Fee, Indemnity Premium, Insurance Guarantee Premium, Additional Security Fee, Mortgage Guarantee Premium, Mortgage Indemnity Premium amongst others. This is a fee that is payable if a 'high percentage loan to value' is required. The MIG fee is for the benefit of the lender and allows them to purchase insurance, which covers them in the event that you default on the mortgage and there is a shortfall from the sale following possession being taken. The policy has no benefit to the borrower and offers no protection - indeed if your property is repossessed and the lender claims on the Mortgage Indemnity Insurance then the insurance company that has paid out the claim to the mortgage lender can still pursue you, the borrower, for repayment of that amount.

The actual terms of the MIG will vary considerably from lender to lender and if you are told that this will apply you should check the details. Many lenders will impose this additional fee if you wish to borrow more than 75% of the value of the property and the premium payable will be calculated as a percentage of the amount you wish to borrow over that figure. There are a handful of lenders that do not charge MIG premiums or who charge in a different way. A number of lenders have announced that as an incentive to attract new business they will meet the cost of the Indemnity premium.

The terms / conditions as detailed above remain the same - all that has changed is the lender is paying the premium. Generally the changes that have been announced to date involve mortgage applications where there is a 10% deposit (90% loan to value ratio). A further point to note is that some lenders who start charging at a set figure, say 80% will back-charge the premium to 75% when calculating the indemnity charge. So if you are borrowing, say, 82% the premium is not charged from 80% but from the 75% level. When discussing your application with your chosen lender, be sure to ask whether MIG applies and at what level it is calculated.

Mortgage term

The length of time in years that you take to pay back your mortgage. Most commonly people take out a term of 25 years, but it could be 5 years if you borrowed a small amount. The Maximum term available is 40 years with some lenders.

Mortgage Valuation Report

This is the most basic form of survey and is the minimum required by lenders in order to ascertain the suitability of the property as security for their loan. Although the borrower will normally receive a copy of this report it should not be relied upon as a comprehensive report on the condition of the property. A more detailed report (either a Home Buyers Report or Structural Survey) should be commissioned when considering the purchase of a property.