The “Mortgage Charter” is a set of standards that mortgage lenders and the Financial Conduct Authority agreed to adopt in the summer of 2022 to residential mortgage borrowers struggling with higher rates.
Key provisions in the charter include:
- Borrowers can contact their lender for assistance and guidance without affecting their credit file.
- Borrowers who are up-to-date with payments can switch to a new mortgage deal at the end of their fixed rate without undergoing another affordability check.
- Lenders will provide timely information to help borrowers prepare for the end of their current rate.
- Lenders will offer personalized support for struggling borrowers, including extending the term to reduce payments, switching to interest-only payments, and other options like temporary payment deferral or part interest-part repayment.
In addition to these, the charter introduces special agreements starting from late June:
- A borrower in arrears will not be forced to leave their home without their consent less than a year from their first missed payment ( unless in exceptional circumstances).
- Borrowers nearing 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.
- Borrowers who are up-to-date with their payments can
- switch to interest-only payments for six months or
- extend their mortgage term to lower their monthly payments without a new affordability check or affecting their credit score.
The government has also implemented actions to make Support for Mortgage Interest easier to access, and the FCA has provided new guidance and information for borrowers affected by the rising cost of living.
For more information, and to see which lenders have signed up to the mortgage charter, see the mortgage charter publication on gov.uk