The government has announced details of a new mortgage charter that will provide extra support to residential mortgage holders in the UK. About 85% of all lenders have signed up for the agreement, according to a report in The Independent.
The chancellor Jeremy Hunt agreed the new plans with the FCA and major mortgage lenders after the Bank of England raised interest rates to 5%, which will mean that the average mortgage holder will have to find up to £350 extra per month when their current fixed rate deals end.
The measures include the option to switch to an interest only mortgage for six months with no impact on credit score.
Nathan Emerson, CEO of Propertymark, the trade body for the UK property sector, said: “The announcement that the UK Government is now introducing new measures to provide support for residential mortgage holders through a new mortgage charter is welcomed and needs to be followed by decision-makers.”
He added: “Our member agents have told us that homeowners are currently being penalised for contacting their bank for support and for switching to interest-only mortgages. Therefore, it is now crucial that the banks and building societies step up to deliver on these promises and help homeowners at such a testing time.”
However, commentators have pointed out that most of the measures are not in fact new, but were already in place prior to the recent announcement. The support does not extend to buy-to-let mortgage holders.
Anyone who is concerned about their ability to find a new mortgage deal is advised to contact an experienced mortgage broker who will be able to provide expert guidance on the latest products and services. They will also be best placed to match you with the lenders who are most able to accommodate your financial needs and circumstances.
Before your appointment, go through your finances and household budget (and current mortgage contract if you have one) and work out exactly what you can afford to pay. If you think there will be a shortfall, consider if any of the support measures will be of use to you.
Check your credit score and make sure that all the information on your credit report is factual and up to date. If you have any issues that have affected your rating, be honest about your current situation when you speak to a broker, because the mortgage company will carry out independent checks and it saves time to be upfront from the beginning.
Most mainstream lenders will be reluctant to offer a new mortgage deal to a customer with a poor credit history. There are specialist lenders who put less emphasis on a credit score and are more willing to consider the whole picture, so depending on your individual circumstances, this may be the most appropriate course of action for you.
If you are looking for advice on a buy to let mortgage with adverse credit, please get in touch today.
Your home may be repossessed if you do not keep up with your mortgage repayments.
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