A new charter has been introduced by the government. Its purpose is to help those who are struggling with their mortgages and are concerned about the possibility of having their homes repossessed. Here, we’ll explain what the Mortgage Charter is and how it can help you.
What is the Mortgage Charter?
The Mortgage Charter is a set of standards that has been agreed upon by the Financial Conduct Authority (FCA), the Chancellor of the Exchequer and the UK’s largest mortgage lenders. It includes measures to help regulated residential mortgage borrowers in the current climate. Support is offered to those who are concerned about the high interest rates and those who are in difficulty with their mortgage payments. Many borrowers are coming to the end of their fixed deals and are anxious about how to afford the current rates available. Others are extremely concerned about the imminent possibility of repossession. The Charter addresses these issues. New measures have been agreed to help alleviate the worry that homeowners are currently experiencing.
How can the Mortgage Charter help homeowners?
Whilst the inflation rate will continue to be tackled, the FCA, the Chancellor and lenders all understand the pressure on homeowners. Lenders would rather avoid repossessions. As such, they are offering solutions to those who are concerned about their current mortgage rates and repayments. The following measures are detailed in the Mortgage Charter.
Agreed by lenders
- If you’re concerned about your mortgage repayments, you can contact your lender and bank for help. They will discuss the options available with you. You can rest assured that this won’t have any impact on your credit score.
- Your lender will contact you before your current rate is due to end. They will provide you with information that will help you to plan ahead.
- If you’re up-to-date with your mortgage payments and want to switch to a new deal when your fixed-rate term ends, your lender will provide support. No new affordability check will be carried out.
- If you’re struggling with your mortgage payments, tailored support will be provided by your lender. Depending on your circumstances, you may be able to switch to an interest-only deal or extend your mortgage term. Both of these options will lower your monthly payments. You may be offered a part-interest part-repayment deal or a temporary payment deferral may be agreed upon. There are a range of solutions that your lender will look at.
Agreed by signatories to the Mortgage Charter
- You won’t be forced to move out and have your home repossessed within a year of your first missed payment.
- From 10th July, you’ll be able to lock in a new deal up to 6 months before the end of your existing fixed-rate deal. If a better deal becomes available before the end of your current one, you can move to that deal with your lender.
- If you’re up-to-date with your mortgage payments, you can either switch to interest-only payments for 6 months or extend your mortgage term. Both of these options will reduce your monthly outgoings. If you choose to extend your mortgage term, you’ll be given the option to contact your lender within 6 months if you wish to revert to your original term. You don’t need to worry about your credit score being affected or a new affordability check being carried out.
Confirmed by the government
- Funding has been given to the Money and Pensions Service so that debt advice can be provided.
- Easier access has been given to Support for Mortgage Interest. You can now get help with your mortgage interest payments after receiving Universal Credit for 3 months.
Introduced by the FCA
- Guidance has been provided to lenders on how to help borrowers who have been impacted by the cost of living crisis.
- Information has been provided to borrowers about the options available to them as well as the support that’s on hand if they’re finding it hard to make their mortgage payments.
Understand your options with expert guidance from our mortgage brokers
The lenders who’ve signed up to the Mortgage Charter represent approximately 85% of the mortgage market. They have already been proactive in offering support to their customers. This support will increase now that the Charter is in place.
If you’re worried about paying higher rates or are struggling with your mortgage payments, don’t hesitate to give our mortgage brokers a call on 01322 907 000. They will look at your current mortgage deal and guide you on the options available according to these new measures. If you’re unable to contact us by telephone, send us an email at info@trinityfinance.co.uk. One of our mortgage consultants will reply to you as quickly as possible. We understand the financial challenges being faced with the high cost of living. You can rest assured that we are here to help you find the best solution possible.