In these changing financial times, we could all use a little extra help. With the introduction of the new Mortgage Charter, this help isn’t far away! In June 2023, the UK’s biggest lenders came together to alleviate nationwide mortgage worries, agreeing on a number of terms designed to make life easier for mortgagors like you.
Whether you’re a first-time buyer venturing into uncharted territory or a seasoned homeowner seeking the latest insights, Fees Free Mortgages is your trusted ally in navigating the world of mortgages. In this blog post, our experts dive headfirst into the Mortgage Charter, shedding light on what it is and how it’s set to redefine your mortgage journey.
There’s no denying that this year’s high inflation has taken a big financial toll on everyone from property-market newbies to existing homeowners. In fact, The Mortgage Charter has emerged at a time when rates are rising to beat 2008’s record highs – with the average two-year fixed deal sitting at 6.85%, and the average five-year deal rising to 6.37%. These are alarming figures for all those considering a mortgage, already making payments or coming to the end of their fixed term.
In the midst of this instability, The Mortgage Charter has emerged as an agreement on industry standards between the government, UK lenders, and regulators. It’s intended to give residential mortgage borrowers worried about increasing rates more options and support.
These standards act as a guidebook for fairness and clarity. They’re there to make sure lenders treat you fairly, especially when your mortgage payments become a challenge. No matter how you got your mortgage, whether you went through a broker or directly to a bank, they ensure everyone gets the same kind of support.
It’s important to preface that The Mortgage Charter doesn’t include any direct financial support in light of rising interest rates. Its support lies solely in the actions taken by lenders.
So, who are these lenders who have assembled to tackle the rising mortgage rates?
Thus far lenders representing 90% of the residential mortgage market have signed up to the Mortgage Charter. These include some of the UK’s biggest lenders, like Natwest, Barclays, and Lloyds, including Halifax and Scottish Widows, HSBC including Santander, Virgin Money, First Direct, and TSB. Joining this group are numerous building societies, including Nationwide, Yorkshire, Nottingham, Coventry, Skipton and Leeds.
These participating mortgage lenders, as led by UK Finance, are committed to not leaving you in the dark when it comes to your mortgage. With the launch of a communication campaign, your lender will be your right-hand man, ensuring that you know what possible options are available to you in these unprecedented times.
Your mortgage isn’t just a transaction, so whether you’re taking your first step towards homeownership, stepping into a new deal, or anywhere in between, the support you have backing your mortgage decisions matters. Learn what The Mortgage Charter could mean for you:
Lenders participating in the Mortgage Charter have agreed on an extensive range of measures protecting customers experiencing difficulties during these turbulent times:
Do changing financial circumstances have you worried about your mortgage repayments? The Mortgage Charter means that you’re now entitled to professional help and guidance from your lender. In contacting them, you’ll receive all the assistance you need with no impact made on your credit file.
If you’re a customer who’s up-to-date with payments on your mortgage, then the Mortgage Charter can provide you with added security. You can rest easy knowing you’re backed by support to switch to a new mortgage deal at the end of your existing fixed-rate deal without another affordability check.
In this market, the last thing you want is to be left behind. With the Mortgage Charter, you’re guaranteed to always be in the loop. Your lender will match your stride by providing you with well-timed information to benefit not just your present, but your future, by helping you plan ahead should your current rate be due to finish. For example, if your fixed-rate mortgage term is nearing its end, then your lender can offer a comprehensive analysis of various mortgage options. Armed with this valuable insight, you’ll be able to transition to a new, favourable rate swiftly, capitalising on shifting market conditions.
The Mortgage Charter dictates that lenders should supply highly trained support staff to those struggling with their mortgages. If you’ve encountered a phase where your monthly budget feels stretched, then your specialist could ensure that your lender offers you an extended-term option. This choice grants you the relief of reduced monthly payments, making your financial commitments more manageable during challenging times. Or, maybe unforeseen circumstances disrupt your cash flow temporarily, in which case they can recommend a temporary payment deferral, giving you the breathing space you need until your situation stabilises.
All of the below options can be taken with no affordability check, avoiding negative implications on your credit score.
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 right up until their new term starts if one is available.
If you’ve found yourself in a spot where you’re staying on top of your mortgage payments, with the Mortgage Charter, you can consider a temporary switch to an interest-only basis for half a year.
Remember, that after your return to interest-inclusive payments, your monthly total will be higher than what you were paying pre-interest-only switch.
We could all use a little more breathing room in our monthly budget. With the Mortgage Charter, you’ll be able to extend your mortgage term, provided you’re all caught up with your mortgage payments. This will dial down your monthly payments, making things easier on your wallet during this period of uncertainty.
If you’re intrigued but don’t want to commit forever, you can revert to your original term within 6 months under The Mortgage Charter’s guidance.
Under new Mortgage Charter guidance, from June 26th 2023, if you’ve hit a bump and missed a payment you’ll have no one knocking on your door within the first twelve months. Repossessing a home is a path that lenders tread with the utmost care, so they’ll only use it as a last resort or if it’s truly better for your financial journey.
The FCA has committed to publishing informational resources for those impacted by rising mortgage rates or struggling with payment. In addition to this, they’re providing comprehensive guidance to lenders, making sure that they’re well-equipped to help you should you need it.
If you’re on Universal Credit, the government has arranged to deliver additional support for you. It will now be easier for you to access the Support for Mortgage Interest Scheme (a loan designed to assist with payments on your mortgage interest, insurance policies, and missed mortgage payments), with help available after three months.
At Fees Free Mortgages, we understand that homeownership can be complex, and with rising mortgage prices leaving obstacles in the way, it’s a destination that seems impossible to reach.
We’re not just about transactions, we’re about your financial peace of mind. Whether you’re a first-time buyer stepping into the world of homeownership, already on the path, or the end of your fixed term is approaching, our doors are open to guide you every step of the way.
Our experts are here to navigate the complexities, ensuring your mortgage aligns with your goals and dreams. Contact us today, and to ensure your mortgage journey continues smoothly.
UK’s Leading Mortgage Protection Providers
Secure the property you've worked for with our comprehensive mortgage protection services. Ready to get started? Fill in our simple form to speak with a friendly advisor.
