Earlier last week the Government announced a Mortgage Charter to help borrowers who were struggling with the increase in interest rates.
30 Lenders have signed up to this Charter and they represent approximately 85% of the mortgage market and these include Barclays, Natwest, Virgin Money, Newcastle Building Society to name but a few.
So what is the Mortgage Charter?
- Borrowers will not be forced to vacate their homes within less than a year from their first missed payment unless they consent to leaving. This provides much needed reassurance for borrowers who are behind with payments to discuss repayment plans with their lender to try and catch up.
- Lenders who have signed up to the new Charter have also stated that customers who are approaching the end of their deal will be able to lock in a new deal up to six months ahead. Although some lenders already do this, it is welcome news for both borrowers and advisers as according to Zoopla the sales process could take anywhere between 6-12 weeks and this is all very much dependent on a number of factors.
- If a customer locks in a rate 6 months before their deal is set to expire then they will have the ability to change their deal ‘like for like’ if there is a better one. This can be actioned right up until the new ‘deal period’ starts.
- Customers who are up to date with payments are able to switch to interest only for 6 months or extend their mortgage term to reduce their monthly payment. Customers can then revert to their original term within 6 months of contacting their lender. You can apply for this only if you are up to date with your contractual monthly payments. No affordability checks are carried out and this will not affect their credit score.
- Lenders have also agreed that if a customer’s deal ends, and payments are up to date then they can switch to a new mortgage deal with their existing lender without any affordability check.
These will be rolled out over the coming days and weeks. If your mortgage deal is coming to an end within the next 6 months, you can have a chat with me about what options are available. Click on the link below to book in a 15 minute chat. https://bloomfieldfinancial.as.me/chat