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Mortgage Facility Letter for the United Kingdom

Mortgage Facility Letter Template for England and Wales

A Mortgage Facility Letter is a formal document issued under English and Welsh law that outlines the terms and conditions under which a lender agrees to provide mortgage financing to a borrower. It details the facility amount, interest rates, repayment terms, security arrangements, and conditions precedent. The document serves as the primary agreement between the lender and borrower, incorporating regulatory requirements under UK financial services legislation and FCA guidelines.

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What is a Mortgage Facility Letter?

The Mortgage Facility Letter is a crucial document in property financing transactions under English and Welsh law. It is used when a lender agrees to provide mortgage financing and needs to formally document the terms of the facility. The letter typically includes detailed information about the loan amount, purpose, interest rates, repayment terms, security arrangements, and conditions that must be met before the facility can be drawn. It must comply with UK financial services regulations, including FCA requirements and consumer protection legislation. The document serves as the primary record of the agreement between parties and forms the basis for the subsequent mortgage security documentation.

What sections should be included in a Mortgage Facility Letter?

1. Facility Details: Key details of the mortgage facility including amount, purpose, and term

2. Interest Rate and Repayment Terms: Interest rate specifications, calculation method, payment schedule, amounts, and frequency

3. Security Arrangements: Details of the property and other security arrangements required for the mortgage

4. Conditions Precedent: Conditions that must be satisfied before the facility can be drawn down

5. Fees and Charges: Comprehensive breakdown of all applicable fees, charges, and costs

6. Representations and Warranties: Borrower's confirmations and declarations regarding their circumstances and understanding

7. Regulatory Disclosures: Required disclosures under FSMA, CCA, and FCA regulations including APR and cooling-off rights

What sections are optional to include in a Mortgage Facility Letter?

1. Insurance Requirements: Additional section detailing specific insurance requirements when particular coverage is mandatory

2. Additional Security: Section for high-risk or commercial mortgages requiring extra security arrangements

3. Special Conditions: Section for any non-standard arrangements or bespoke terms specific to the borrower

4. Early Repayment Terms: Detailed terms for early repayment when early repayment charges apply

What schedules should be included in a Mortgage Facility Letter?

1. Property Schedule: Detailed description and particulars of the mortgaged property

2. Payment Schedule: Detailed breakdown of payments including dates, amounts, and allocation between principal and interest

3. Fees Schedule: Comprehensive list of all fees and charges applicable to the facility

4. Standard Terms and Conditions: Standard terms and conditions referenced in the facility letter

5. APRC Calculations: Detailed breakdown of Annual Percentage Rate of Charge calculations and underlying assumptions

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Ƶ

Document Type

Mortgage Document

Cost

Free to use
Relevant legal definitions









































Clauses







































Industries

FSMA 2000: Financial Services and Markets Act 2000 - Primary legislation governing financial services regulation in the UK, including mortgage activities

CCA 1974: Consumer Credit Act 1974 - Regulates credit agreements and provides consumer protection measures

Law of Property Act 1925: Fundamental legislation governing property law, including mortgages and charges over land in England and Wales

Consumer Rights Act 2015: Modern consumer protection legislation ensuring fairness in contracts and transparency in terms

Mortgage Credit Directive Order 2015: Implementation of EU rules on mortgage credit, establishing framework for mortgage lending

MCOB: FCA Mortgage Conduct of Business Rules - Detailed regulatory requirements for mortgage lenders and administrators

FCA Handbook: Comprehensive regulatory guidelines and requirements from the Financial Conduct Authority

RAO: Regulated Activities Order - Defines which activities require FCA authorization, including mortgage activities

Data Protection Act 2018: UK's implementation of data protection requirements, including UK GDPR provisions

Unfair Contract Terms Act 1977: Controls unfair terms in contracts, particularly regarding exclusion clauses

Consumer Protection from Unfair Trading Regulations 2008: Prohibits unfair commercial practices and sets standards for business-to-consumer transactions

Financial Services Distance Marketing Regulations 2004: Regulates the distance marketing of financial services to consumers

Money Laundering Regulations 2017: Sets requirements for customer due diligence and anti-money laundering procedures in financial services

Teams

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