What is the Mortgage Charter?

Since 2008 we have been benefiting from low mortgage interest rates. However, due to the rate of inflation and various world events, over the last 15 months we have seen significant increases.  

 

This has impacted mortgage borrowers.  

 

For first time buyers they are having to earn more or provide a bigger deposit to allow the amount of mortgage needed to purchase the property.  

 

For those coming to an end of their mortgage deal, some are seeing large increases to the monthly mortgage payment. This coupled with the current cost of living crisis is having a huge impact on household incomes. 

 

The Mortgage Charter has been agreed between the government, FCA and a large number of mortgage lenders to help support mortgage borrowers during the current interest rate increases. 

 

The lenders who have signed up to the charter have made a commitment to support borrowers by offering the options below….. 

 

Switching to an interest only mortgage for 6 months. 

 

This would mean you are only paying the interest on your mortgage not the capital. This will reduce your monthly payments for a short term period. It is important to remember, where you have not paid the capital for 6 months you will have to eventually pay this back. 

 

Extending the mortgage term. 

 

If you are on a repayment mortgage (capital and interest paid each month) this will reduce down the monthly payments. However, it is important to note you will pay more interest over the term of the mortgage as then number of years have increased. 

 

Lock in a new rate 6 months before your deal comes to an end. 

 

If your mortgage deal is due to end in the next 6 months it is imperative you speak to your lender or a mortgage broker to lock in a new deal. The majority of lenders have flexibility in the sense that if rates come down between the date of application and completion, you should be able to move down to the lower rate at no cost (providing the product is like for like). Some lenders would require to re-underwrite the case so it is worth checking with your broker or lender before application. 

 

In the next 12 months over a million mortgage deals are coming to the end of their discounted period.  

 

To do nothing and leave your mortgage on the standard variable rate will have a significant increase on your monthly outgoings.  

 

 

If you are in this situation, get in touch. Let’s review your financial situation, give you an idea of what your monthly payments could look like and plan how to move forward with your application. By doing nothing will be costly. Let us help you. 

 

victoria@hdconsultants.net 

 

For full Government infomation on the Mortgage Charter, visit their website here