Borrowers worried about mortgage payments should speak to their lender rather than assume that a headline support measure applies automatically. The Mortgage Charter sets out commitments concerning regulated residential borrowers, with conditions attached to the different options. The published Charter expressly excludes buy-to-let mortgages.
Its commitments include giving customers timely information before their current rate ends and providing tailored support for those struggling. Simply contacting a lender for help and guidance does not affect the borrower’s credit file. Taking a particular support arrangement is a separate decision whose terms should be explained.
Temporary payment changes
For customers up to date with payments, the Charter describes an option to move to interest-only payments for six months, or to extend the mortgage term with an option to return to the original term within six months. The specified options can be offered without a fresh affordability assessment or an effect on the credit score, subject to the conditions in the Charter.
Lower payments during a support period do not mean that the debt has been reduced by the same amount. The Charter warns that later monthly payments may be higher than they otherwise would have been and that overall costs over the life of the mortgage will be higher. Permanent changes can require further checks, including where a proposed term extends beyond expected retirement.
Preparing for the end of a deal
The Charter also describes the ability to arrange a new deal up to six months ahead and request a better like-for-like option from the lender if one becomes available. The footnotes make clear that six months is a maximum, and borrowers should ask how far ahead their own lender can offer an arrangement.
Customers already in arrears should continue working with their lender on appropriate support. They should not assume that an option intended for customers whose payments are up to date covers their situation.
A useful conversation asks what the arrangement changes now, what happens when it ends and how it affects total repayment. Obtain those answers in writing where possible. This is an explanation of the published framework, not a recommendation to reduce payments or a guarantee of an individual lender’s decision.