What Is a Mortgage Illustration?

Find out how we can help you get a mortgage today

Our Customers rate us 4.6 out of 5

trustpilot-stars

After browsing through various properties, you’re likely trying to keep track of all the finances and costs involved. Fortunately, a mortgage illustration can help you do just that.

A mortgage illustration outlines each mortgage’s information and costs concisely. It’ll be convenient if you’re looking at multiple properties. You’ll make a better decision by comparing each mortgage’s potential costs.

Our Customers rate us 4.6 out of 5

trustpilot-stars

Start your mortgage journey today

Trusted advisors for people struggling to get a mortgage

Read on to learn more about mortgage illustrations, what they include, and what you’ll need to receive one.

Defining Mortgage Illustration

A mortgage illustration is like a receipt you receive for a transaction, including all the costs in the mortgage you applied for. It details all the required information about the mortgage deal from the lender.

It usually accompanies an offer as well. It provides a clear overview of the product and is essential if you have a minimal background in mortgage payments.

You can receive a mortgage illustration for any sort of property. It can be a buy-to-let, residential, or commercial space.

The Importance of a Mortgage Illustration

Whether you’re experienced with managing mortgages or are a first-time buyer, mortgage illustrations are essential. The document will help you make a more calculated decision. You’ll also be able to differentiate between other mortgages and costs.

What Does a Mortgage Illustration Include?

Mortgage illustrations offer a comprehensive list of payments and fees required. It reflects several factors, including:

  • Monthly repayments
  • Initial interest costs
  • Interest costs over the mortgage period
  • Mortgage amount
  • Mortgage interest type, whether fixed or variable
  • Over-paying costs or early repayment cost
  • The cool-off period where you can withdraw from the mortgage deal
  • Special features such as cashback
  • Instructions if you don’t want the mortgage anymore

Mortgage Illustrations Optionally Include

  • Valuation fees
  • Lender fees
  • Broker fees
  • Solicitor fees

Detailed Overview of Mortgage Illustration

Mortgage illustrations include the general information required, from the mortgage amount to the interest rate. Nonetheless, each document is well-tailored to every borrower’s potential property.

Aside from that, every mortgage illustration begins with an introductory section that will indicate the mortgage lender’s company. In most scenarios, it’s likely a bank name.

The following section then encompasses your mortgage advisor’s contact details and other information. It allows you to check for the authority of the illustration. It’ll also state the commission amount your mortgage broker will receive from the lender for the document submission.

Next, you’ll see the main information regarding the mortgage itself. It’ll include the total mortgage amount, previously discussed with your advisor. You’ll also see the number of years needed to cover the mortgage.

The coming section dives into the mortgage’s interest rate information. It’ll include the total monthly interest and principal amount. It’ll then go through other payments, such as broker and mortgage fees.

The final section will detail terms and conditions. For instance, it’ll disclose what will happen if you overpay or underpay. It may also discuss your borrower rights.

What Do I Need to Receive a Mortgage Illustration?

You’ll need to provide some information before requesting a mortgage illustration from your lender. That can include:

  • Annual household income
  • Deposit or down payment amount
  • Duration of mortgage deal
  • Duration of fixed-term mortgage
  • The appraised value of the property
  • Amount to borrow from the lender

How to Receive a Mortgage Illustration

You’ll want to contact a mortgage advisor to ask for a mortgage illustration. After scheduling an appointment, they’ll talk about your finances. You’ll then dive into mortgage options suitable for your income and lifestyle.

They’ll ask you for your ID, bank statement, and payslips to craft the mortgage illustration. After running through your information, the advisor will grant you the illustration.

After agreeing on the illustration, your advisor will help you apply for it. After a couple of days, the advisor should be ready to submit it to the lender’s portal. Then, the lender, along with their underwriting team, will go through your documents. If all goes well, you’ll receive the offer.

Mortgage Illustration vs. Offer

Although they usually come together, a mortgage illustration and an offer differ. The latter requires credit checks and affordability to receive. Meanwhile, a mortgage illustration is a non-binding document. You can ask for it at any time during the deal.

In most cases, your mortgage lender will provide you with an offer during the late stages of the deal. After confirming your affordability and performing a credit check, you’ll likely be given the offer.

Mortgage Illustration vs. Agreement in Principle

A mortgage illustration and agreement in principle differ in a few ways. The lender will likely present the latter after they give you the mortgage illustration and before the offer.

You’ll receive it once the lender confirms your financial conditions and deems your affordability applicable to the mortgage. That said, neither of the documents is binding and doesn’t require a credit check to be given.

Do You Need to Respond to Mortgage Illustrations?

Since mortgage illustrations are non-binding, you don’t have to respond or agree to their terms and conditions. They’re primarily created to give you an overview of the costs involved with the mortgage.

They’re not applications or offers, so you won’t have to worry about them appearing on your credit check. It goes both ways to the lender as well. In turn, the mortgage illustrations can look different by the time they give you an offer.

Does a Mortgage Illustration Guarantee You Will Receive an Offer?

A mortgage illustration doesn’t guarantee you an offer. Since you won’t at that point have provided documents like a credit check and a deposit, you likely won’t receive an offer yet. Nonetheless, after receiving a mortgage illustration, you’ll be on the right track to gaining one.

Our Customers rate us 4.6 out of 5

trustpilot-stars

Start your mortgage journey today

Trusted advisors for people struggling to get a mortgage

FAQs

Is an ESIS a mortgage illustration?

A European Standardised Information Sheet (ESIS) and a mortgage illustration are similar documents. The ESIS provides you with risks and features associated with the mortgage deal. It also details the costs and terms of the mortgage in a standardised format.

Is a mortgage illustration a binding contract?

Mortgage illustrations are non-binding contracts. You can walk away from the mortgage if you only request this document.

How long does it take for a mortgage illustration to offer?

It can take two to six weeks to receive a mortgage offer. Once approved, the document is then valid for up to six months.

Key Takeaways

A mortgage illustration is a non-binding document that gives you a general idea of your mortgage costs. You’ll need to provide information before requesting the mortgage illustration. It can include your annual income and mortgage duration.

Besides that, mortgage illustrations are helpful for those new to the mortgage process. It’ll help give you a clear understanding of all the costs and fees involved in a mortgage.

You can make a wiser choice by engaging with a dedicated mortgage advisor at When The Bank Says No and comparing all your mortgage illustrations. We’ll analyse your personal and financial circumstances beforehand to ensure the right option is chosen for you so your mortgage application has the best chance of success.

 

Table of Contents

Emma Jones
Emma Jones
Emma began her career in Lloyds Banking Group, first in the unsecured & secured loans department at Halifax and later as a mortgage advisor at Lloyds. During 9 years in these roles and a further 2 years at Yorkshire Building Society, Emma was able to observe the impact of the recession, and how the banks let their customers down by denying loans and mortgages. Wanting to be a driving force for change, she stepped into a market advice role where she has been able to help clients when others couldn’t. Identifying a gap in the mortgage space, Emma went on to establish When the Bank Says No. As a keen property investor, she has been the focus of features in publications including The Sunday Times and This is Money. Emma’s greatest joy is overcoming the low expectations of their customers, many of whom have all but given up on getting a mortgage due. One thing Emma has learned through her own personal struggles is every client must be treated like a human and understood better by advisors and lenders in the industry. “We all have to navigate life events which can ultimately impact your financial status. It shouldn’t mean dreams of homeownership or business growth should have the breaks applied”. Emma and her team’s passion for helping people overcome the challenges they may face when applying for a mortgage have fuelled the success of When the Bank Says No.