What is a Mortgage Illustration?

For most of us, the process of applying and securing a mortgage can be confusing – especially without the help of a trusted mortgage broker.

With a plethora of documents that will be requested from your lender, and another hall of documents that will be sent your way, knowing ‘what’s what’ can sometimes get lost in the process.

One of the most important documents you should be keeping your eye on is the Mortgage Illustration. “What is a mortgage illustration document?” I hear you ask…

Also known as a Key Facts Illustration (KFI), a Mortgage Illustration is a document that will outline the key details of your mortgage agreement. In this article, we will cover everything you need to know about your mortgage illustration.

Short on time? Watch the video below for an overview on mortgage illustrations:

What Does a Mortgage Illustration Cover?

A Mortgage Illustration – or Key Facts Illustration – is a personalised document that is created by your broker or lender that will outline the key details of your mortgage agreement. This will include information such as:

The total cost of the mortgage

• A detailed report of Monthly repayments
• The agreed type of interest rate
• Details of any upfront charges
• Details of any Overpayment options that are available (including associated criteria)
• Length and time of any cooling-off period

All mortgages in the UK are strictly regulated by the Financial Conduct Authority (FCA). Part of these regulations is to ensure that all financial products – including mortgage products – must be suitable for the borrower’s financial situation. As such, you will be required to complete a fact find questionnaire to ensure you are compliant, allowing brokers and lenders alike to assess your financial profile. The key details evaluated in the fact find questionnaire are:

• Income and expenditure
• Existing debts
• Other financial factors (including dependants)

At its core, the purpose of the fact find is to help brokers or lenders build a picture of your current financial standing and your specific requirements. Using this information, brokers and lenders will then match your profile with the most suitable mortgage product available, creating a recommendation through a Mortgage Illustration.

Why is a Mortgage Illustration Important?

The main advantage of a Mortgage Illustration provides you with a key insight into what you can expect from your mortgage.

In short, a Mortgage Illustration will allow you to:

• Gain a clear overview of the mortgage(s) you are being offered
• Allows for a clear comparison of mortgage deals, side by side, to find the best option.
• Save time, outlining all important details about your broker and/or lender, and mortgage in one document.

If you’re working with an experienced broker – like Boon Brokers – there may be cases whereby multiple Mortgage Illustrations will be presented. This will only happen if there are a number of different options to consider, for example a 2-year fixed mortgage rate and a 5-year fixed rate mortgage option. The two Mortgage Illustration documents are for you to compare, to ensure you’re happy and select the mortgage offer that is best for you.

What Information Do I Need to Provide to Get a Mortgage Illustration?

As we’ve previously touched upon, to receive a Mortgage Illustration, you will first need to complete a fact find questionnaire. This questionnaire will be used by brokers and lenders to establish your financial circumstances.

Preparing the information ahead of time can help ensure that all information is correct and in order. For example, before you complete your fact find questionnaire, it is best that you check your credit score. This is an easy task and can be achieved through online services like Checkmyfile. Reviewing your credit report will give you an overview of:

• Any outstanding debts
• Defaults or County Court Judgments (CCJs)
• Your overall credit score

All of this information will help when it comes time to find the mortgage that best suits your requirements. Additionally, for brokers, this information is invaluable in finding the most suitable lender for you. For example, you may need to find a mortgage with credit card debt, or may need to access a specialist lender for increased flexibility in their mortgage criteria.

Key Details You’ll Need to Provide

When it comes to filling out the fact find questionnaire, you will typically be required to answer questions around the following topics:

• Total Mortgage amount needed (how much you need to borrow)
• The value of the property that you’re looking to purchase
• Name, age, and identification
• Your gross income and occupation (including salary, bonuses, and all other earnings)
• Deposit amount (how much you’re putting down)
• Source of deposit (evidence will typically be required at a later stage)
• An estimated mortgage term
• Preferred Interest rate type (fixed, tracker, or variable)
• Details of any credit issues (such as missed payments, defaults, or CCJs)
• Breakdown of your monthly expenses (including rent, childcare, food, bills, and any other financial commitments)

Making sure that you have these details ready to hand can greatly speed up the mortgage application process, and help your broker find the best mortgage deal that is tailored to your requirements.

When Will I Receive a Mortgage Illustration?

You will receive a Mortgage Illustration only after the completion of your fact find questionnaire, and your mortgage broker or lender has identified the most suitable mortgage product available to you.

It is important to note that a Mortgage Illustration can also be called a Key Facts Document or a European Standardised Information Sheet (ESIS).

Working with a true whole-of-market broker – like Boon Brokers – will provide you with complete access to the whole of the mortgage market, instead of a singular lender. We provide expert mortgage advice – completely free – and can help you find and compare the most competitive mortgage offers and rates on the market today.

What is the Difference Between a Mortgage Illustration and a Mortgage in Principle?

The key difference between a Mortgage Illustration and a Mortgage in Principle (MIP) is that while the Mortgage Illustration will provide an overview of a mortgage offer, an MIP is a preliminary agreement that provides an insight into how much a lender might be willing to lend based on your initial financial assessment.

A Mortgage Illustration is a document that will outline all the essential details of your mortgage, without requiring you to commit to the mortgage. Essentially, it is a detailed document equivalent to ‘window shopping’, providing key details on your interest rates, fees, repayment terms, and much more.

If you’re happy with the details outlined in your Mortgage Illustration, the next step would be to request a Mortgage in Principle from your chosen lender or through your broker.

What is a Mortgage in Principle?

A Mortgage in Principle is a document that provides confirmation from a lender as to how much they would be willing to loan you.

Crucially, a Mortgage in Principle is a preliminary agreement, and is based on the financial information you initially provide through the fact find questionnaire. As such, the exact amount will vary and will also be subject to change if there are any financial developments that would affect your ability to repay the loan.

The information you provide is used by the lender’s bespoke system, and they will conduct their own credit checks. In most cases, the credit check is a soft credit check, which doesn’t affect your credit score. However, some lenders will still decide to perform a hard credit check.

It is important to note that completing multiple hard credit checks may negatively impact your credit score, and so it’s always good to check with your broker what type of check the lender will be performing.

Do I Need a Mortgage in Principle?

Though a Mortgage in Principle is not a legal requirement, it can provide some brilliant benefits to the efficiency of the entire mortgage process.

Typically, a Mortgage in Principle is used when making an offer on a property. It demonstrates to the estate agents that you are serious about the purchase of the property, and have been provided the green light by an official lender for a mortgage loan.

With that being said, it is crucial to remember that a Mortgage in Principle is only a preliminary assessment of what a lender may loan you, and is not a final approval. Rather, it should be used as an indication, or rough estimation, of the loan amount you can expect. This will help speed up finding a property within your price range.

If you want to learn more about MIP, read our article – What is a Mortgage in Principle? – for a comprehensive dive into mortgages in principle.

What Happens When I Receive My Mortgage Illustration?

When you receive your Mortgage Illustration, it is important that you take the time to read over all the information carefully. The document will provide you with a lot of details about mortgage products that you could opt for, and taking the time to digest all the information now will save a lot of time and potential worry in the future.

Pay particular attention to the penalties and early repayment charges. These fees can cause problems down the line, should you wish to make overpayments or move sooner than you perhaps expect.

Another key aspect that you need to consider is the overall amount you will be borrowing. Reviewing how much you’re borrowing and comparing this with your outgoings is incredibly important – you need to be happy and comfortable with the additional stress of mortgage repayments.

Should you have any concerns after reading your Mortgage Illustration, Boon Brokers is ready and waiting to help you. Whether it’s clarifying specific details, or exploring other mortgage options, our expert mortgage advisers can help – completely fee-free.

What Other Documents Are Important When I Get a Mortgage?

The process of getting a mortgage can be broken down into 5 easy ‘document’ steps.

1) Enquiry

This is the initial stage where we will ask what you’re looking to achieve and what are your requirements. We will then request that you complete the fact find questionnaire. As a whole-of-market broker, we can then access the whole of the UK mortgage market, and start to find a mortgage that fits your specific needs.

2) Mortgage Illustration

Once we have found a mortgage product that matches your needs, we will send you all the details in a Mortgage Illustration. If you’re happy with the information provided you can ask for an agreement in principle.

3) Agreement in Principle

This will be an informal agreement from the lender, indicating exactly what they will be likely to offer in relation to your desired product. This is of course all subject to their lending requirements. Once the Agreement in Principle is complete, you can take the agreement in principle to estate agents to make offers on properties.

4) Full Mortgage Application

Once you have found the perfect property, you will need to submit a full mortgage application. When using Boon Brokers, we complete this for you and deal with the lenders directly to alleviate the stress that a mortgage application process normally causes.
Lenders will often ask more detailed questions at this time, and may require additional evidence to approve the mortgage.

5) Mortgage Offer

Once a lender is satisfied that you meet their criteria for a mortgage, they will make a formal mortgage offer. Your broker will provide this alongside details of their full advice that they have provided to you, and why this mortgage was recommended.
You should read this information thoroughly and carefully to check it meets your needs and everything is correct before accepting.
During the process you will collect paperwork documenting everything. By the end you should have the following as a minimum:

• Affordability calculation
• Mortgage Illustration.
• Agreement in principle.
• Mortgage offer.

All documentation provided during a mortgage process is important, and you should remember that a mortgage is likely to be the biggest financial decision you will make in your life.

Following best practice, you should keep this documentation safe and read through all of it as you receive it.

Why Understanding Your Mortgage Illustration is Key to Finding the Right Deal

Receiving a Mortgage Illustration is a great way to help you understand the mortgage that is being offered to you, with the opportunity to compare it with other mortgage options.

A Mortgage Illustration will outline all the essential information about your mortgage, allowing you to make informed decisions without needing to commit immediately.

From explaining penalties, costs, and early repayment charges, a Mortgage Illustration will clearly highlight everything that you need to know.
We understand that the mortgage process can be stressful, especially if you’re unsure about how everything works. At Boon Brokers, we offer FREE, impartial, and no-obligation advice that is personalised to your unique circumstances and needs.

Contact us today to discuss how we can help you find the best mortgage deal tailored just for you!