What’s the Mortgage Charter and how will it help you?

If you are struggling to pay your mortgage and have either fallen into arrears or fear you may do in future, there is help at hand. Here’s the full lowdown on the Mortgage Charter agreed by lenders with the government to offer support

For any homeowner about to exit a fixed-rate deal there is a very real concern about the price of remortgaging.

Likewise, if you are on a tracker or variable deal you will have seen your monthly repayments ticking upwards for some time now.

Data from the Resolution Foundation suggests annual repayments for those due to remortgage next year are likely to rise by £2,900 – from £2,000. That’s a lot of extra money to find when the cost of living is already putting immense pressure on household budgets.

It is therefore unsurprising many borrowers will be facing the prospect they may not meet their monthly obligation to their lender.

If this is something you have been fearing, or are encountering right now then the news lenders have made a commitment to support borrowers in difficulty will come as something of a relief.

But what, exactly, has been agreed and how can it help you. Here’s our rundown of what support is now available.

All lenders who have signed what is being called the Mortgage Charter have agreed to abide by the following pledges. Around 85% of UK lenders have signed up to this.

Anyone worried about their mortgage repayments can contact their lender for help and guidance, and it will not negatively impact their credit file

For customers who are up to date with payments to far

There will be support for customers who are up-to-date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability check.

Lenders will provide well-timed information to help customers plan ahead should their current rate be due to end.

They will also offer tailored support from ‘highly-trained’ staff to help anyone struggling with repayments. For those who are up to date with repayments so far, there will be options to:

• Extend the term to reduce payments with the option to revert to original term after six months
• Switch to interest-only payments for six months
• Temporary payment holiday
• Switching to part interest-only, part repayment

For borrowers who are in arrears

One significant area of the charter is that from 26 June borrowers will not be forced to leave their home without consent in less than a year from their first missed payment.

So, repossession procedures will not be issued for up to a year after a borrower misses a payment. It is expected banks and lenders will continue working with the customer to help them during this time.

Support for customers remortgaging

At present lenders offer borrowers the chance to sign up to a mortgage between three to six months before it becomes live. This gives customers the chance to lock into a deal earlier and potentially before rates rise further. But not all lenders offer the six-month option.

Help for homeowners on benefits

If you are on benefits, there is financial help available in the form of Support for Mortgae Interest which provides eligible homeowners with help towards interest payments.

The government said this is now easier to access and those on Universal Credit can get help after three months.