Understanding the Mortgage Charter

If you’re a mortgage holder worrying about rising interest rates, you may have heard about the recently introduced Mortgage Charter.

As the cost of living crisis continues and interest rates keep increasing, many households are feeling the impact.

For those already on a variable mortgage rate, the rising prices may be stretching your budget to its limit, and for mortgage holders approaching the end of their fixed rate deal, the looming steep rise may cause a great deal of stress and worry.

The Government, the Financial Conduct Authority (FCA), and many mortgage lenders have agreed to make commitments to support mortgage holders. These commitments form the Mortgage Charter, which was announced in June 2023.

Am I eligible for support from the Mortgage Charter?

Support set out in the Mortgage Charter will only be available if you hold a mortgage with a lender who has agreed to the Charter; however, we encourage you to contact your lender if you’re struggling with your mortgage, even if they haven’t agreed to take part.

Most of the UK’s largest mortgage lenders have agreed to the Charter. You can see a complete list of lenders who have signed up at the bottom of this article.

Many of the measures are only available to mortgage holders who are up-to-date on their repayments – if you’re currently in mortgage arrears, please speak to your lender as soon as possible.

How can it help me?

The measures agreed to in the Charter have been created to comfort mortgage holders who are anxious about rising or high interest rates and to support those who find themselves in a difficult situation.

Lenders have agreed that mortgage holders worried about their ability to afford their repayments can contact their mortgage provider for help and guidance without impacting their credit file.

You’ll also be able to switch to a new fixed rate with your current lender when your fix ends without having affordability checks, as long as you’re currently up-to-date with your payments.

Mortgage providers will also proactively provide well-timed information before your fixed term ends, helping you to plan ahead, and provide specifically tailored support if you’re struggling.

“Tailored support” could mean extending your term, switching to interest-only payments, a temporary referral, or other options, which your lender will discuss with you depending on your circumstances.

To protect mortgage holders, borrowers won’t be made to leave their property without their consent until at least a year after their first missed payment (unless in exceptional circumstances).

You also now have the ability to lock in a new fixed deal up to six months ahead of your current fixed rate deal ending. If a new, better fixed rate then becomes available from your lender before your new deal begins, you’ll be able to change your agreement up to two weeks before the new fixed rate deal begins.

Finally, if you’re up-to-date with your payments, you’ll be able to:

• Switch to interest-only payments for six months,
• Extend your mortgage term to reduce your monthly payments, with the option of reverting to your original term within six months.

These measures don’t apply to buy-to-let mortgages, and most measures will only apply to customers who are up-to-date with their payments. If you’re in arrears, we urge you to contact your mortgage provider to resolve the situation.

What should I do if I’m worried about being unable to pay my mortgage?

If your fixed rate is about to end, or your bills are becoming too high to fit within your budget, it’s important to speak to your mortgage lender and see what support they can offer.

Hopefully, the support outlined in the Mortgage Charter will be able to help in the short term, but it’s important to note that monthly payments after the support may be higher than they otherwise would have been and overall costs over the life of the mortgage could be higher.

Which lenders have signed up to the Charter?

According to the Charter’s policy paper, approximately 90% of the mortgage market have agreed to the measures in the Charter.

All of the lenders listed below have signed up to the Mortgage Charter and committed to supporting their customers with the above measures:

• Aldermore Bank
• Bank of Ireland UK
• Barclays
• Bath Building Society
• Buckinghamshire Building Society
• The Co-operative Bank, including Platform and Britannia
• Coventry Building Society
• Danske Bank
• Darlington Building Society
• Dudley Building Society
• Earl Shilton Building Society
• Ecology Building Society
• Family Building Society
• Furness Building Society
• Glasgow Credit Union
• Hinckley & Rugby Building Society
• HSBC, including First Direct
• Kensington Mortgage Company
• Leeds Building Society
• Leek Building Society
• Lloyds, including Halifax and Scottish Widows
• Loughborough Building Society
• Mansfield Building Society
• Melton Mowbray Building Society
• Metro Bank
• Monmouthshire Building Society
• Nationwide Building Society
• Natwest, including RBS and Ulster Bank
• Newbury Building Society
• Newcastle Building Society, including Manchester Building Society
• Nottingham Building Society
• OSB Group, including Precise Mortgages and Kent Reliance
• Principality Building Society
• Progressive Building Society
• Santander
• Scottish Building Society
• Skipton Building Society
• Suffolk Building Society
• Teachers Building Society
• Tipton & Coseley Building Society
• TSB, including Whistletree
• The Vernon Building Society
• United Trust Bank Limited
• Virgin Money, including Clydesdale Bank and Yorkshire Bank
• West Bromwich Building Society
• Yorkshire Building Society

We’re here to help! What you can do next if you need confidential and free debt help

If you are struggling with debts call us on 0800 072 1206. We’re open from 8am-8pm Monday to Friday and 9am-3pm on Saturdays.

Alternatively, you can visit our www.payplan.com/rcnfoundation to speak to us via live chat or for more information.