CAT mortgages are a slightly less common form of mortgage loan that is structured to meet government standards on Charges, Access and Terms.
What are CAT standards, and how do they apply to mortgages?
The treasury states that CAT standards are designed to prevent confusing marketing and other hidden charges. By applying CAT standards, the government sets out conditions designed to make mortgage products as clear as possible. However, at this stage, CAT standards are not yet enforced for all mortgages, and they are voluntary.
So all mortgages are not CAT standard?
When a borrower takes out a mortgage, the small print will inform them of whether or not their loan is CAT-standard. Basically, CAT-standard loans ensure that there are no surprised in the small print, and that terms will not suddenly change.
So, should I avoid mortgages that are non-CAT standard?
Non CAT-standard mortgages are not necessarily different to CAT mortgages. Non-CAT mortgages can offer attractive features that particularly suit some mortgage borrowers. These could include a low or specialist interest rate. Sometimes fees or charges that make them non-CAT standard accompany these loans, but this is not always the case.
What does CAT standard really mean?
When applied to variable rate mortgages, fixed-rate mortgages, discount mortgages, cash back mortgages and capped rate mortgages, CAT-standard implies a series of characteristics.
These include: daily interest calculation, any payment credited instantly, fees must be disclosed up front. Depending on the type of loan, CAT standards also vary. For instace, variable rate loansdictate that interest rates must be no more than 2 per cent above base rate, and when rates fall mortgage payments must be adjusted within one month. Fixed-rate loans must charge a maximum arrangement fee of 150 pounds, with other limits on redemption charges.
CAT standards also dictate factors like borrowers can decide date of payment, and early repayments can be made at any time. Furthermore, all advertising and paperwork on CAT standard mortgages must be clear, fair and straightforward.
How do I find a CAT standard mortgage?
For more information about CAT standard mortgage loans and to get a CAT standard mortgage loan quote, please use our Mortgage Enquiry Form and one of our experts will contact you for further assistance.