Last updated: Nov 27, 2023

What is the Mortgage Charter?

at Mortgages for Doctors

What is the Mortgage Charter?

In the face of economic uncertainties and the commitment to halving inflation, the UK government has introduced the Mortgage Charter, a set of standards agreed upon by the country's largest mortgage lenders and the Financial Conduct Authority (which regulates mortgages).

The charter aims to provide clarity and assurance to mortgage borrowers who may be concerned about the potential impact of higher rates on their financial situations. But how exactly? Let’s take a look.

Let’s start with the background

In an attempt to address the root causes of inflation and ensure the stability of the economy, the chancellor convened a meeting with major mortgage lenders, UK Finance, and the FCA in June, during which new commitments were established to support borrowers in these challenging times, particularly those approaching the end of their existing deals.

The resulting Mortgage Charter outlines several key commitments aimed at providing support and reassurance to mortgage holders. These commitments include:

  1. No impact on credit score: Borrowers worried about their mortgage repayments are encouraged to contact their lenders for help and guidance without any impact on their credit file.
  2. Smooth transition to new deals: Customers who are up-to-date with payments can switch to a new mortgage deal at the end of their existing fixed-rate deal without undergoing another affordability check.
  3. Timely information: Lenders will provide well-timed information to help customers plan ahead, especially if their current rate is due to end.
  4. Tailored support: Lenders commit to offering tailored support for customers facing difficulties, which may include extending the mortgage term, switching to interest-only payments, or other options depending on the customer's circumstances.
  5. No repossession without consent: A borrower will not be forced to leave their home without their consent unless in exceptional circumstances, in less than a year from their first missed payment.
  6. Locking in deals: Customers approaching the end of a fixed-rate deal, starting from July 10, will have the opportunity to lock in a deal up to six months ahead and manage their new deal until it starts.
  7. Flexible payment options: A new deal allows customers who are up-to-date with payments to switch to interest-only payments for six months or extend their mortgage term without affecting their credit score.

Who has lent their support?

Lenders who have signed up to this charter include Barclays Bank, HSBC, Lloyds, Nationwide, Natwest, Santander, TSB and the Yorkshire Building Society. You can see the full list here. The list represents around 90% of the mortgage market.

You might have already received a letter from your lender offering support and outlining the above - this is the Mortgage Charter in action.

What should you do?

The Mortgage Charter is designed to support people who are struggling with their mortgage repayments, particularly those worried about the impact of an increase in monthly payments when their existing fixed-rate deal ends.

But if you can continue making your monthly mortgage repayments as usual, this is probably the best option for you. This is because by doing this, you’ll pay less money back to your lender overall.

If you’d like to discuss your options, please contact your lender or speak to us. We’re always here for you.

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