The Mortgage Charter Explained: What it Means and Which Lenders Are Onboard

Mortgage Charter

In an effort to quell concerns over rising inflation and anxiety over high-interest rates, there is a new commitment in place to support borrowers and their households. The Mortgage Charter is the outcome of meetings led by Chancellor Jeremy Hunt, together with the primary lenders and the Financial Conduct Authority (FCA). The charter is aimed at relieving financial strain on families and businesses, and reducing rising inflation within the economy.

So, as a mortgage borrower, what does the charter mean for you? Let’s take a closer look at some of the principles and which lenders (so far) have signed on the dotted line. 

Key principles you need to know

Repossession isn’t something anyone wants to experience, least of all homeowners. With this in mind, lenders have an in-depth set of criteria for customers experiencing financial difficulties. Lenders will continue to use those sets of measures along with new criteria, as set out in the charter. It’s worth noting that these commitments do not apply to Buy-to-Let mortgages. 

All lenders have agreed upon the following. 

Help and guidance 

Anyone concerned about their repayments is encouraged to reach out to their lender for advice and, in doing so, will not experience a negative impact on their credit file.

The current deal is coming to an end

Support will be available to those up-to-date with their payments and switching to a new mortgage deal at the end of their existing product contract without incurring an affordability check. This applies to 97% of the mortgage market, where customers are not only up-to-date on their payments but also not seeking to increase their loan amount or change their repayment type or term.

Timely advice

Lenders will be responsible for providing information to borrowers that will help them take decisive action as their current rate deal is due to expire and within ample time. 

Customer service 

Whether looking to extend their term to reduce the repayment amount, offering a switch to interest only, or applying a temporary solution – such as payment deferral or interest-part payment, experienced staff will be available to help borrowers with their specific challenges.

Plus, the signatories of the charter have agreed upon these extra principles. 

  • As of 26th June, there will be no forced evictions without consent [unless in exceptional circumstances], where the first missed payment is less than a year [no further action will be taken if a Possession Order is granted from June 26th 2023].
  • As of 10th July, borrowers nearing the end of their fixed-rate deal can engage in a new deal up to six months ahead. Additionally, they can request a like-for-like deal up to the new deal start date, should one be available [new rates must be confirmed at least two weeks before the new term start date].
  • A new deal option between lenders, the FCA and the government allows customers whose payments are up-to-date to either:
    • Convert to interest-only repayments for six months.
    • Extend their mortgage term to reduce monthly repayments and give a choice to revert to their original term within six months by contacting their lender. 

In addition, the government’s commitment is to ensure customers can easily access Support for Mortgage Interest. Even if you’re on Universal Credit, you can now receive help with the interest repayments on your mortgage after three months.

Who are The Mortgage Charter signatories?

The lenders who have signed the charter represent roughly 85% of the mortgage market. They are as follows:

  • Bank of Ireland UK
  • Barclays
  • Bath Building Society
  • Buckinghamshire Building Society
  • The Co-operative Bank, including Platform and Britannia
  • Coventry Building Society
  • Darlington Building Society
  • Earl Shilton Building Society
  • Ecology Building Society
  • Family Building Society
  • Furness Building Society
  • Glasgow Credit Union
  • Hinkley & Rugby Building Society
  • HSBC, including First Direct
  • Leeds Building Society
  • Leek Building Society
  • Lloyds, including Halifax and Scottish Widows
  • Loughborough Building Society
  • Melton Mowbray Building Society
  • Nationwide Building Society
  • Natwest, including RBS and Ulster Bank
  • Newcastle Building Society
  • Nottingham Building Society
  • Principality Building Society
  • Progressive Building Society
  • Santander
  • Scottish Building Society
  • Skipton Building Society
  • Suffolk Building Society
  • Tipton & Coseley Building Society
  • TSB
  • The Vernon Building Society
  • United Trust Bank Limited
  • Virgin Money, including Clydesdale Bank and Yorkshire Bank
  • West Bromwich Building Society
  • Yorkshire Building Society

Borrowers can expect increased communications regarding their mortgages as UK Finance launches campaigns in the coming months. You can access the file here for more information on HM Treasury’s Mortgage Charter.

Whether you’re an existing borrower whose mortgage deal is coming to an end in the near future, or you’re keen to get on the property ladder and would like to keep up to date on current affairs, we can provide you with independent mortgage and insurance advice. We’re open six days a week, and our friendly, professional and expert advisers have decades of experience to help you navigate with ease. No matter how complex, we at Choice Mortgages are here and ready to help in person, by phone or by email. 

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