Reassurance for YOU

In June this year a MORTGAGE CHARTER was agreed between the government and the majority of lenders to help protect vulnerable residential mortgage borrowers, at a time of rising interest rates and with many coming towards the end of their Fixed Rate deals.

This Charter (which doesn’t apply to buy-to-let mortgages) is intended to build on the help already in place for borrowers who may find themselves in difficulty. And formalises across the wider marketplace what might already be on offer, in part, by individual lenders.

Of course, those borrowers that can meet their payments should continue to do so, as this will always be the best course of action. However, for others, there is a fallback position with the signatories to this Charter (which represents over 85% of the mortgage market) agreeing to the following:

– From 26th June 2023, a borrower will not be forced to leave their home without their consent in less than a year from their first missed payment (unless in exceptional circumstances).

–  With effect from 10th July, customers approaching the end of a fixed rate deal will have the chance to lock-in a deal up to six months ahead. They will also be able to manage their new deal and request a better like-for-like deal with their lender (if one is available) right up until two weeks before their new term starts.

– A new deal between lenders, the FCA and the government permits customers, who are up-to-date with their payments, to:

– switch to interest-only payments for six months or

– extend their mortgage term to reduce their monthly payments and give customers the option to revert to their original term within six months by contacting their lender.

 All of these options can be taken by customers, who are up-to-date with their payments, without needing a new affordability check or affecting their credit score.

Affordability, though, will need to be checked if borrowers wish to permanently convert to an interest-only mortgage, or where the mortgage term is proposed to be extended beyond the borrower’s expected retirement date.

Further support in place from ALL lenders…

Slight duplication here as to what’s in the Charter, as this covers the offering from all lenders.

– Anyone worried about their mortgage repayments can contact their lender for help and guidance, without any impact on their credit file.

–  Support for customers, who are up-to-date with payments, to switch to a new mortgage deal at the end of their existing fixed rate deal, without another affordability check.

–  Lenders will provide well-timed information to help customers plan ahead, should their current rate be due to end.

–  Lenders will offer tailored support for anyone struggling. This could mean extending their term to reduce their payments, or offering a switch to interest-only payments. It could also encompass a range of other options like a temporary payment deferral or part interest-part repayment.

If these issues apply to you, or you want to be aware of the help that’s on offer, then do talk to us as well.

 Your property may be repossessed if you do not keep up repayments on your mortgage.

Mortgage overpay?

 – Whilst no-one would happily want to divert extra money to paying the increased amount of interest on their mortgage, this step may be more affordable for some.

– For that group, an additional opportunity could exist.

– If you’re currently on a low fixed rate for a period of time, with comparatively lower monthly payments, why not consider overpaying on your mortgage?

– This would deliver obvious benefits when you come to renew.  Your outstanding mortgage amount will be lower, and it’ll be less of a shock for your financial outgoings.