After meeting with the UK’s principal mortgage lenders (over 75% of the market) and the Financial Conduct Authority (FCA), the Chancellor agreed the series of measures to assist homeowners through this confusing period in the market.
One of the key measures states that customers will not be forced to have their homes repossessed for up to 12 months of their first missed payment. For more details, check out our article all about the repossession clause of the charter.
Deal switching
If you are on a fixed rate deal and up-to-date on your repayments, you will be given the chance to lock in a new deal up to six months ahead of the end of your fixed rate.
Extra support for borrowers
Another key aspect of the Mortgage Charter is an agreement between the FCA, lenders, and the government to offer greater support to borrowers. One of the elements of this is tailored support for anyone struggling to keep up with their repayments.
This includes:
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Being able to reduce your monthly repayments by extending the term of your mortgage (with the option to return to your original term within the first 6 months)
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The option to switch to an interest-only deal for up to 6 months, also reducing your monthly repayments
No impact on credit score
The Charter also states that if you are worried about your mortgage repayments, you can contact your lender for assistance and guidance - without it having an impact on your credit file (and by extension, your credit score). The government strongly encourages contacting your lender if you are unsure about your repayments. Also, switching to a different deal, as discussed above, will also have zero impact on your credit score.
What’s next?
The FCA, lenders, and the government are committed to implementing the full Charter quickly. Lenders that have agreed to the Mortgage Charter will soon be launching a communications campaign to ensure borrowers are aware of it and know what to expect when they contact their lender. To view the full list of lenders who have signed up to the Charter, click here.
Before making any decisions about your existing mortgage or next moves in the market, it's always essential to consult with an adviser to ensure you're completely informed of your alternatives and what this may imply for you now and in the long term. We're here to help you with anything you need, whenever you need it.
You may also seek free unbiased help and support from debt organisations such as StepChange, or the Citizens Advice Bureau.
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
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