The City regulator, the Financial Conduct Authority (FCA), has adjusted its rulebook to back the pledges made by banks and building societies at the end of June. It says lenders should make their increased support options clear and accessible to all borrowers.
Here, Which? delves into what's included in the new charter and reveal the lenders that have signed up.
What's included in the mortgage charter?
Tailored forbearance measures are already offered by providers, but the options available differ lender to lender.
Under the new charter, the support options become clearer, and these will be regulated by the FCA to ensure banks and building societies are fulfilling what they've agreed to.
The government says the measures 'should offer comfort to those who are anxious about high interest rates' and 'support for those who do get into difficulty'.
Flexibility to change mortgage terms
Customers who are up-to-date with their payments, but will struggle to meet future payments can take respite by:
New affordability checks will not be required before borrowers make a switch, and credit ratings will be not impacted.
However, if customers continue to take the relief after the six-month period, their credit file could then be impacted.
Find out more:Remortgaging support
From 10 July, customers coming to the end of their fixed-rate deal will be able to book a new rate with their existing lender once contacted.
This can be agreed six months in advance of your existing deal expiring.
Once booked in, you will be able to request a better deal from the lender up to two weeks before the new term starts.
This often happens already, however, its inclusion in the charter firms up the commitment.
Find out more:Repossession rules eased
Thanks to the charter, anyone who falls into arrears will not have their home repossessed without consent, unless in exceptional circumstances, for at least 12 months.
Lenders usually tend to start the repossession process after three months, but those which have signed the charter have agreed to push this back to a year.
The extension is hoped to offer some slack for homeowners, allowing them additional time to stabilise their financial situations.
Find out more:What to be aware of if you take support
The FCA welcomes the commitments, but adds that borrowers should be aware that making changes, even temporary ones, will very likely result in higher monthly payments in the future or paying back more overall.
For example, switching to interest-only for six months will mean your mortgage will take longer to pay off, as you won't be increasing the equity you own during this time and only paying off the interest. The capital amount you owe will not budge.
Sheldon Mills, from the FCA, said: 'If you can keep up with your mortgage payments, you should, as changing your contract could lead to higher payments down the line.'
Note:Which banks have signed the mortgage charter?
Around 85% of mortgage providers have agreed to the charter, including all of the major banks and building societies.
The full list is as follows:
The charter only applies to customers of lenders who have signed up. However, if your bank or building society is not on the list, that isn't to say it doesn't offer mortgage support options.
If you are struggling to pay or concerned about your future finances, it's important to contact your lender as soon as possible.
Find out more:How long will the charter be in place?
The FCA, which is regulating the support pledges, says it will review the changes made to its rulebook in a year.
Mortgage costs are not expected to fall anytime soon, with the Resolution Foundation think tank predicting the UK will face a 'mortgage crunch' next year as 1.6 million households come to remortgage.
When will mortgage interest rates come down?
In an attempt to rein in inflation, the Bank of England (BoE) has opted to continually hike interest rates, with the idea being that higher interest rates mean less money is spent by the population and price rises slow as a result.
In announcing the charter, Jeremy Hunt said: 'We will do what it takes, and we won’t flinch in our resolve because we know that getting rid of high inflation from our economy is the only way that we can ultimately relieve pressure on family finances and on businesses.'
source https://www.which.co.uk/news/article/mortgage-support-which-lenders-have-signed-the-new-relief-charter-aCaOl0k9L1vU