CAT Standard Mortgage

With so many mortgage products available, you can easily get confused what each mortgage can and cannot do when you're trying to unravel the Terms & Conditions

CAT standards are set by the government help to prevent misleading marketing and hidden charges. The aim is to ensure a mortgage product's conditions are simple and easy to understand.

What is a CAT Standard mortgage?

A CAT mortgage is one that abides by a number of standards defined by the government. CAT stands for 'Charges, Access and Terms', which are the three key areas where a mortgage must adhere to the standards in order to be defined as CAT Standard. The idea is that you take out a CAT-standard mortgage, you can be confident that will have no hidden surprises tucked away in the fine print and that the terms won't suddenly change for the worse.

CAT standards dictate how the mortgage is structured, priced and marketed. It does not mean the government will guarantee the mortgage, that they recommend the mortgage or that it is necessarily the best deal.

The following conditions must be met in order for a mortgage product to be classified as CAT standard.

Charges

• Interest is to be calculated on a daily basis
• All payments and overpayments made must credit the account immediately
• There must be no separate Higher Lending Charge payable
• All fees must be disclosed and paid in cash up front before the loan is taken
• A broker cannot charge a fee for arranging a CAT standard mortgage

Access

• The minimum amount of required borrowing is no more than £10,000
• Anybody can apply for the mortgage
• The lender's normal lending criteria must apply with no special selection rules
• Provided the lender is happy the new property is good security, you should be able to transfer your CAT standard mortgage when you move home
• You can choose which day of the month to make your regular payments
• You can make mortgage overpayments at any time without incurring an Early Repayment Charge

Terms

• All advertising and paperwork must be easy to understand and fair
• There are no conditions that you must buy any other mortgage product to get a CAT standard mortgage such as insurance
• If your lender cannot continue to offer a mortgage on CAT standard terms, you must be given at least 6 months notice to allow you adequate time to assess your options
• Any interest on arrears is paid at the normal rate

CAT standards do not apply to all mortgages and are voluntary. A mortgage lender does not have to provide a CAT standard mortgage product although you will find that most will offer at least one. CAT standard mortgages are usually advertised as such, however, if you're unsure, the product literature will state whether it is CAT standard or not.

This does mean that a non CAT standard mortgage is necessarily a worse deal or that the lender is trying to deceive you. Non CAT standard mortgages may offer a range of different features that you may find attractive such as a more competitive interest rate. In exchange for this, the lender may impose a tie-in period to mitigate their risk and this could be the only reason why the mortgage does not qualify as CAT standard.

Summary

• CAT standards are set by the government to ensure a mortgage product's conditions are simple and easy to understand
• CAT means 'Charges, Access and Terms' which are the three areas where a mortgage product must meet certain criteria in order to be classified as CAT standard
• A mortgage that is CAT standard does not mean it is endorsed or guaranteed by the government or that it is a better deal

For more information about 'Cat Standard Mortgages', you can call us on 020 8783 1337 or submit an online quote.