• Hayley Leith

KFI: What One Is & How To Read One

Updated: Sep 23



When a mortgage advisor or lender recommends a mortgage to you, they will give you a Key Facts Illustration or European Standardised Information Sheet. They are commonly referred to as a "KFI".


These documents include all the “key facts” about the mortgage deal and are tailored to your personal situation and needs, such as the amount of money you’re wanting to borrow, the length of the mortgage, and the mortgage deal your advisor has recommended.




What information is included in a KFI?

A KFI will show the name of the mortgage applicant(s), the date it was produced on, and how long it is valid for.


A KFI will normally also include the following sections:


About this illustration

  • This section explains how the Financial Conduct Authority (FCA) requires mortgage advisors to provide you with a mortgage illustration to help you compare the different mortgage products available to you.


Which services you are being provided with

  • This part confirms whether or not the advisor has recommended a mortgage product to you or just given you information


The details you have provided

This includes the:

  • loan amount

  • repayment method

  • mortgage term

  • value of the property

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


Description of the mortgage

This includes the:

  • loan amount

  • initial rate payable

  • product description

  • method of repayment

  • term of the loan

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



Overall cost of the mortgage

This shows how much you’ll repay to the lender in total and how much you’ll be paying back for every pound borrowed.



What you will be paying each month

This shows the monthly payment figure during the fixed period, and the monthly payments after the fixed period ends.



An outline of the risks involved in mortgages

This looks at the effect of interest rates rising, reminding you that you’ll still need to pay your mortgage even if your income falls.



The fees you must pay

These might include:

  • Arrangement fee

  • Valuation fee

  • Broker fee

  • Legal fee

  • Funds transfer fee


Insurance

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



What happens if you no longer want the mortgage

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



What happens if you wish 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 potential 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.


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



Other borrower rights

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



Using a mortgage intermediary

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



Where you can find additional information about mortgages

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




So, why should you read your KFI?

A KFI should make it easy for you to see and compare the terms and costs of the mortgage. You should read the KFI carefully and ensure that you fully understand it before you apply for a mortgage. After all, a mortgage will probably be the biggest financial commitment you will ever make.


If there is anything you are unsure about in your KFI, make sure you speak to your advisor about it.


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