The Mortgage Charter in the UK is a set of standards agreed upon by mortgage lenders, the Financial Conduct Authority (FCA), and the government to help borrowers who are concerned about increasing mortgage repayment costs due to the rising interest rate environment. It was announced in June 2023 and is supported by lenders representing over 85% of the UK mortgage market. The charter aims to ensure fair treatment of borrowers and provide them with the necessary support during this challenging period.
Key features of the Mortgage Charter include:
1. Assistance for Up-to-Date Borrowers: The Charter applies to borrowers who are current on their regulated first charge residential mortgages and home purchase plans. It does not apply to buy-to-let mortgages, second charge mortgages, bridging loans, or mortgages not up to date.
2. New Mortgage Deals Without Affordability Checks: Borrowers can switch to a new mortgage deal at the end of their existing fixed-rate deal without an affordability check. They can lock into a new deal up to six months ahead and change it if a better deal becomes available.
3. Interest-Only Payment Option: Borrowers can temporarily switch from a capital repayment basis to an interest-only repayment basis for six months without an affordability assessment.
4. Mortgage Term Extension: The Charter allows borrowers to extend their mortgage term up to retirement without an affordability assessment, and to reverse this extension to the original term within six months if desired.
5. Credit Score Protection: Options available under the Charter can be taken by customers without affecting their credit score.
6. Repossession Policies: Lenders have committed not to repossess a property within 12 months of a missed payment except in exceptional circumstances.
7. Support and Guidance: Borrowers worried about their mortgage repayments can contact their lender for help and guidance without impacting their credit file.
These measures are part of the government’s effort to provide relief to households affected by the economic challenges and high inflation, with the aim of supporting borrowers through this difficult period. The Charter is a response to the significant increase in refinancing costs for many UK mortgage borrowers, especially those whose fixed-rate deals are expiring and facing higher rates for new deals.
At Lucra Mortgages, we provide expert advice, guiding you smoothly through the mortgage process. Our team of experienced advisors is dedicated to finding the most competitive rates, tailored to your unique financial needs, ensuring the entire process is as stress-free as possible. Why wait? Contact us today at 01225 970 830 for a free consultation.
