Mortgage Charter: more options and flexibility for people in financial difficulty

On 26 June, the government published a Mortgage Charter, with lenders representing 85% of the UK’s mortgage market committing to the measures announced.

And on 30 June, the FCA published a policy statement and revised rules to bring the Mortgage Charter into force, effective from that date.

The Financial Ombudsman Service welcomes the additional options and flexibility that the Mortgage Charter offers.

As always, we encourage any borrower who’s struggling to get in touch with their lender as soon as they can to discuss their options.

What measures are in the Mortgage Charter?

The commitments build on existing measures for borrowers facing financial difficulty. The Mortgage Charter introduces the ability for borrowers to:

• reduce payments through a switch to interest-only payments for six months
• extend the mortgage term to reduce monthly payments, with the option to revert to the original term within six months

From 26 June, borrowers won’t be forced to leave their home without their consent unless in exceptional circumstances, in less than a year from their first missed payment.

Most other commitments take effect from 30 June, when the FCA’s rule changes come into force. And from 10 July, participating lenders will also offer borrowers the chance to lock in a new interest rate up to six months before their old one expires.

You can read the FCA’s rules here.

What the new measures mean for our service

We already deal with complaints involving mortgages and financial difficulty. If you’re a consumer who’s worried about your mortgage, talk to your lender as soon as possible. They can discuss your options. After doing that, if you think you haven’t been treated fairly, you can bring a complaint to us.

If you do have a complaint about your mortgage, read more about mortgage complaints when you’re in financial difficulty.

For financial businesses, we’ll take the new commitments into account when considering mortgage complaints. We’ll look to the FCA’s rules and will take them into account when we see cases related to the measures.

We’d still expect to see fair and reasonable treatment for all borrowers facing financial difficulty, whether the new measures are available to them or not.

Read more about our approach to mortgage complaints when consumers are in financial difficulty.