How to read a key facts illustration

18th November 2019

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When a lender or mortgage adviser recommends a mortgage, they must give you a key facts illustration (KFI) document.

As the name suggests, this document gives you the “key facts” about a mortgage deal.

A KFI is tailored to your personal situation, the amount of money you want to borrow, and the mortgage deal your adviser has recommended.

What information does a KFI include?

A KFI shows the name of the mortgage applicant or applicants, the date it was produced and how long it’s valid for.

It normally has the following sections (or similar):

About this illustration

This section explains that the Financial Conduct Authority (FCA) requires mortgage advisers to give you a mortgage illustration to help you compare different mortgage products.

Which service are we providing you with

This part confirms whether the adviser has recommended a mortgage product or just given you information.

What you have told us

This includes:

  • loan amount

  • repayment method

  • term of the mortgage

  • value of the property

  • loan-to-value (LTV) of your mortgage

Description of this mortgage

This includes:

  • loan amount

  • initial rate payable

  • product description (for example, a fixed rate of 2% until November 2021)

  • repayment method

  • term of the loan

It also details the rate payable after any fixed period ends (the lender’s standard variable rate or SVR).

Overall cost of this mortgage

This shows how much you’ll repay the lender in total, and calculates how much you’ll pay back for every pound borrowed. For example, £1.20 for every £1 borrowed.

What you will need to pay each month

This shows the monthly payment during the fixed period (24 payments of £600, for example) and the monthly payments after the fixed period ends (276 payments of £750, for example).

Are you comfortable with the risks?

This looks at the effect of interest rates rising, and reminds you that you still need to pay your mortgage if your income falls.

What fees must you pay

These might include:

  • arrangement fee

  • valuation fee

  • broker fee

  • legal fee

  • funds transfer fee

Insurance

This includes details of any insurance you need to take out to be eligible for the mortgage, such as buildings insurance.

What happens if you do not want this mortgage anymore

This details the early repayment charges (ERCs) on the mortgage.

What happens if you want to make overpayments

Some mortgages allow overpayments up to a certain percentage of the loan to be made before ERCs kick in.

Additional features

This includes any incentives, such as free legal fees.

Interest rates and other costs

This is the Annual Percentage Rate of Charge (APRC).

The APRC is the total cost of the mortgage expressed as an annual percentage. It shows the total cost of the mortgage, including fees, over the term ( 25 years, for example).

However, most people will remortgage at some point rather than stick with one mortgage for the entire term.

Other rights of the borrower

For example, how long you have to consider a binding mortgage offer.

Using a mortgage intermediary

This details the commission fee the lender will pay your broker if you take out the mortgage.

Where can you get more information about mortgages

This directs borrowers to the Money Advice Service’s guides on choosing a mortgage.

Why should you read your KFI?

A KFI should make it easy for you to see the costs and terms of the mortgage, and to compare them with other mortgages.

You should read the KFI carefully and fully understand it before you apply for your mortgage. After all, a mortgage will probably be your biggest financial commitment.

Speak to your adviser if there’s anything you’re not sure about in your KFI.

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