The Mortgage Charter - offering struggling borrowers a lifeline

Following a further Base Rate increase in June 2023, the government has announced support for borrowers who are struggling with their mortgage payments.

75% of mortgage lenders including NatWest, Nationwide, Barclays & Santander will allow home loan customers to switch to interest only payments or extend the term of their loan for up to six months, without impacting their credit score.

This breathing space will be a relief to homeowners worried that their properties could be repossessed if they fall behind on their mortgage payments.

However, borrowers must be aware that temporarily shifting their mortgage to different terms could cost them a lot more over the long run. Interest only mortgages are cheaper as only the interest is being repaid, but none of the debt. So, when they switch back to a repayment loan, more will eventually have to be repaid each month, to make up for the missed time. Similarly extending the term, can reduce monthly payments, but will mean the debt incurs more interest over time.

Customers approaching the end of a fixed rate deal will also have the chance to lock in a new deal up to six months ahead.  They will also be able to request a better like-for-like deal with their lender right up until the new term starts, if one is available.

If you have concerns about your mortgage, or your current mortgage rate is due to expire soon, then please contact me and I will be happy to help.

Although every effort has been made to ensure that the information provided in this article is accurate and correct, the information provided does not constitute any form of financial advice. We recommend that you take financial advice before making any financial decisions.