The Mortgage Charter Explained

If you’re worried about rising interest rates or struggling to keep up with monthly repayments, the government’s Mortgage Charter could offer the breathing space you need. Here, we explain what the Charter is, the specific measures lenders have agreed to, and what it means for you. We’ll also cover how a mortgage broker can help you navigate these new options to find the best solution for your finances.

What is the Mortgage Charter?

The Mortgage Charter is a voluntary agreement between the government, the Financial Conduct Authority (FCA), and the UK’s principal mortgage lenders. Introduced to support borrowers during a period of high inflation and rising interest rates, it sets out standards that lenders must adopt to help customers.

The aim is to provide comfort to those anxious about their mortgage costs and offer concrete support to those facing payment difficulties. Signatories to the Charter cover approximately 90% of the mortgage market, meaning most residential borrowers will be able to access this support.

Key Measures and Benefits

The Charter introduces several new flexibilities and protections for borrowers. Importantly, contacting your lender to discuss these options will not impact your credit score.

Key measures include:

• Switch to Interest-Only: Borrowers who are up to date with payments can switch to interest-only payments for six months. This temporarily reduces monthly outgoings.

• Extend Your Mortgage Term: You can extend your mortgage term to reduce monthly payments, with the option to revert to your original term within six months.

• No Affordability Checks: The options above can be taken without a new affordability check or affecting your credit score.

• Lock in Deals Early: Customers approaching the end of a fixed-rate deal can lock in a new deal up to six months ahead. You can also request a better like-for-like deal right up until your new term starts if one becomes available.

• Repossession Protection: Borrowers will not be forced to leave their home without their consent within 12 months of their first missed payment (unless in exceptional circumstances).

Mortgage Charter Eligibility

To benefit from the specific measures in the Charter, you generally need to meet the following criteria:

• You must have a residential mortgage (the Charter does not apply to Buy-to-Let mortgages).

• For the automatic switch to interest-only or term extension without affordability checks, you typically need to be up to date with your payments.

• If you are already in arrears, you should still contact your lender, as they are committed to offering tailored support, though the specific "no check" options may differ.

Which Mortgage Lenders Have Signed Up?

The vast majority of lenders in the UK have signed the Charter. This includes the "Big Six" and many building societies. Key signatories include:

• Barclays

• HSBC (including First Direct)

• Lloyds Banking Group (including Halifax and Scottish Widows)

• Nationwide Building Society

• NatWest (including RBS and Ulster Bank)

• Santander

• TSB

• Virgin Money

A full list is available on the government website, but if your lender is a major high-street bank or building society, they are likely participating.

You can compare the latest rates available from these lenders and more by using our free mortgage-sourcing tool below:

How a Broker Can Offer Guidance

While the Charter encourages you to contact your lender directly, speaking to an independent mortgage broker first can be incredibly valuable. Lenders can only discuss their own products, but a broker can look at your entire financial picture.

Here is how a broker can help you benefit from the Charter:

• Impartial Advice: A broker can help you decide if a temporary measure (like switching to interest-only) is actually in your long-term best interest, or if remortgaging to a different lender might save you more money.

• Navigating Options: They can explain the "maths" behind extending your term - showing you exactly how much more interest you might pay over the life of the loan so you go in with your eyes open.

• Future Planning: If you lock in a rate six months early, a broker can keep monitoring the market for you. If rates drop before your term starts, they can advise you on switching to a cheaper deal, ensuring you don't miss out on savings.

• Complex Situations: If you are already in financial difficulty, a broker can act as an intermediary and help you understand the full range of support beyond just the Charter's headline measures.

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Why Choose Money Helpdesk for Mortgage Advice?

Navigating government schemes and changing interest rates can be stressful. Our partner brokers are experts in the shifting mortgage landscape. They can review your current deal, explain the implications of the Mortgage Charter for your specific circumstances, and help you calculate the long-term costs of any changes.

• Expert Guidance: Access to brokers who understand the fine print of the Mortgage Charter.

• Whole of Market: Compare rates from across the market, not just your current lender.

• Free Initial Chat: Find out where you stand with a no-obligation conversation.

• Exclusive deals: Our brokers can often access exclusive deals with participating lenders of the Mortgage Charter, products you won’t find on the high street.

Ready to take advantage of a free, no-obligation chat with a broker who can break down the key points of the Mortgage Charter and explain what they mean for you? Get started here.