If you’re arranging a mortgage, you may be given a document called a mortgage illustration before submitting your full application. It sets out important information about a particular mortgage, including the amount you’re looking to borrow, the interest rate, monthly repayments, mortgage term, fees and other important features.
A mortgage illustration helps you understand the mortgage you’re considering before proceeding, but it is not the same as a mortgage offer and does not mean your mortgage has been approved.
In this guide, we explain what a mortgage illustration means, what information it contains, how it differs from a mortgage in principle and mortgage offer, and what normally happens after you receive one.
Quick Answer: What Is a Mortgage Illustration?
A mortgage illustration is a document showing the key features and costs of a particular mortgage. It can include the mortgage amount, term, interest rate, monthly repayments, fees, APRC, early repayment charges and other important conditions.
It allows you to understand the mortgage you’re considering before proceeding with an application. Receiving an illustration does not mean the lender has approved your mortgage.
What Does a Mortgage Illustration Mean?
A mortgage illustration gives you detailed information about a particular mortgage product based on an example or proposed borrowing scenario.
If you’re receiving mortgage advice, your adviser may provide an illustration for the mortgage product being discussed or recommended. Depending on how you’re arranging your mortgage, illustrations can also be produced through lenders and other mortgage channels.
You may also hear terms such as ESIS (European Standardised Information Sheet) or KFI (Key Facts Illustration) used when discussing mortgage information documents.
The important thing to understand is that an illustration explains the features and potential costs of the mortgage. It isn’t confirmation that the lender has agreed to lend you the money.
What Information Is Included in a Mortgage Illustration?
The exact format can vary, but a mortgage illustration will typically provide important information about the mortgage you’re considering.
This may include:
- Mortgage amount – how much you’re looking to borrow.
- Mortgage term – how long the mortgage is expected to run.
- Repayment method – for example, repayment or interest-only.
- Interest rate – including details of an initial fixed, tracker or other rate where applicable.
- Monthly repayments – the expected payments based on the illustrated mortgage.
- APRC – the Annual Percentage Rate of Charge, designed to show the overall cost of the mortgage.
- Fees and charges – such as lender product fees and other applicable costs.
- Early repayment charges – any charges that could apply if you repay or change the mortgage during a specified period.
- Future interest rate – where applicable, the rate the mortgage may revert to after an initial deal ends.
- Total amount payable – an illustration of the overall amount that could be repaid over the mortgage term.
You should read the document carefully rather than looking only at the headline interest rate or monthly payment. Fees, early repayment charges and what happens after the initial deal ends can all affect whether a mortgage is suitable for you.
Mortgage Illustration Example
For example, somebody considering a £300,000 repayment mortgage might receive an illustration showing:
Mortgage amount: £300,000
Mortgage term: 30 years
Repayment method: Capital and interest repayment
Initial interest rate: The rate applicable to the mortgage product being considered
Monthly repayment: Calculated using that product’s rate and term
Product fee: Any applicable lender fee
Early repayment charge: Details of any charge and when it applies
Rate after the initial period: The applicable follow-on rate
The actual figures will depend on the mortgage product available at the time the illustration is produced.
This is why an illustration should be treated as a snapshot of the mortgage being considered, rather than a generic description of how much a mortgage costs.
Mortgage Illustration vs Mortgage in Principle
A mortgage illustration and a mortgage in principle are different parts of the mortgage process.
A mortgage in principle, also commonly called an agreement in principle or decision in principle, gives an indication of how much a lender may potentially be willing to lend based on the information provided and its initial assessment.
Depending on the lender, obtaining one may involve a soft or hard credit search.
A mortgage illustration, on the other hand, explains the features and costs of a particular mortgage product or borrowing scenario.
In simple terms:
Mortgage in principle: an initial indication of potential borrowing.
Mortgage illustration: detailed information about the mortgage product you’re considering.
Neither should be confused with a formal mortgage offer.
Is a Mortgage Illustration a Good Sign?
Receiving a mortgage illustration can be a positive step because it usually means you’ve reached the stage where a particular mortgage product or scenario is being considered in detail.
However, it doesn’t mean your mortgage has been approved.
Depending on where you are in the process, the lender may still need to assess your full application, income and supporting documents, credit profile, property and valuation before deciding whether to issue a formal mortgage offer.
So an illustration can be a sign that your mortgage plans are progressing, but it shouldn’t be treated as a lending decision or guarantee.
Mortgage Illustration vs Mortgage Offer
A mortgage illustration is not the same as a mortgage offer.
An illustration explains the features and costs of a mortgage you’re considering. It can be provided before the lender has completed its full assessment of your application.
A mortgage offer is issued later in the process, after the lender has assessed the application and completed the checks it requires.
| Mortgage Illustration | Mortgage Offer |
|---|---|
| Explains a mortgage product | Confirms the lender is offering the mortgage |
| Can be provided before a full application is approved | Issued after the lender's required assessment |
| Shows rates, repayments, fees and conditions | Sets out the terms on which the lender is prepared to lend |
| Does not mean you've been approved | Represents formal approval, subject to the offer's terms and conditions |
If you’ve received an illustration but not a mortgage offer, you should not assume the mortgage has been approved.
Does a Mortgage Illustration Mean You’ve Been Approved?
No. Receiving a mortgage illustration does not mean your mortgage application has been approved.
An illustration provides information about the mortgage you’re considering. Formal approval comes later when the lender has assessed your application and is prepared to issue a mortgage offer.
If you’ve only received an illustration, there may still be underwriting, document checks, credit assessment and a property valuation to complete.
How Do You Get a Mortgage Illustration?
If you’re receiving mortgage advice, your adviser can provide an illustration for a mortgage product you’re considering or that has been recommended based on your circumstances.
Before recommending a mortgage, an adviser will normally need to understand information such as:
- your income;
- deposit or property equity;
- existing debts and financial commitments;
- employment or self-employed status;
- property value and mortgage requirement;
- preferred mortgage term;
- your wider circumstances and objectives.
Depending on where you are in the mortgage process, supporting documents and a mortgage in principle may also be required.
The illustration then allows you to review the proposed mortgage in more detail before deciding whether to proceed.
What Happens After a Mortgage Illustration?
If you’re happy with the mortgage shown in the illustration and your adviser has confirmed that it’s appropriate to proceed, the next stage may be submitting the full mortgage application.
The typical process is:
- Review the illustration
Check the mortgage amount, term, rate, repayments, fees, early repayment charges and other important conditions. - Confirm you want to proceed
Ask any questions you have before the application is submitted. - Submit the mortgage application
The lender receives the full application and supporting information. - Lender assessment and underwriting
The lender may assess income, expenditure, credit history and supporting documents and could request additional information. - Property valuation
Where required, the lender assesses the property being used as security for the mortgage. - Mortgage offer
If the lender is satisfied with the application and property, it may issue a formal mortgage offer.
The exact process and timescale vary between lenders and applications.
Can a Mortgage Illustration Change?
Yes. A mortgage illustration reflects the product and information available when it is produced.
If something changes before you apply, such as the mortgage amount, term, product, interest rate or your circumstances, an updated illustration may be required.
Mortgage products can also be withdrawn or changed by lenders, so receiving an illustration doesn’t necessarily reserve a particular mortgage rate.
How Long Is a Mortgage Illustration Valid For?
There isn’t one universal validity period for every mortgage illustration.
An illustration relates to the mortgage product and information available when it is produced. If the product changes, is withdrawn or your borrowing requirements change, a new illustration may be needed.
If you’re unsure whether an older illustration is still relevant, check with your mortgage adviser or lender before relying on it.
Oportfolio’s Mortgage Advisors
Senior Mortgage and Protection Adviser Jade Pinkerton explains why borrowers should look beyond the headline interest rate when reviewing their illustration:
“I love mortgage illustrations; they provide the full details of the mortgage being applied for – sometimes known as a KFI (key features illustration) or ESIS (European Standardised Information Sheet). They provide the full details, not just the rate, bank, monthly payment – but also the finer details – such as early repayment charges.
It is important that mortgage borrowers realise this is not a ‘mortgage offer’. The documents do in fact look very similar, and the content is also similar so I can see where the confusion might be for some. But the Illustration is an outline of what you are applying for – nothing is agreed or guaranteed at that stage.”
Speak to Oportfolio About Your Mortgage
If you’re buying a property or remortgaging and want help understanding your mortgage options, Oportfolio can assess your circumstances and explain the products that may be available to you.
If you’ve already received a mortgage illustration and aren’t sure what part of the document means, speak to your mortgage adviser before proceeding.
Contact Oportfolio to discuss your mortgage options with one of our advisers.
