I had some family and friends who were going through difficult circumstances and could not switch their current mortgages. So, I decided to help them find what options were available for them. There are some free mortgage advisory services and websites like MoneyHelper or Citizens Advice that provide superb supporting documentation and advice on switching to better mortgage payments.
The first thing I did was to use website search engines to research what other people had done in similar situations with their mortgages. I also found useful supporting documentation from the Financial Conduct Authority (FCA), which had conducted research after a lot of consumer responses highlighted the difficulties that consumers faced when they could not switch to affordable mortgages despite being up to date with mortgage payments. The CP19/14 Mortgage customers: proposed changes to responsible lending rules and guidance consultation paper was produced with consultation from lenders and financial experts to address these concerns.
Who’s This Viable For
I would like to share some ideas on how to correspond with your mortgage provider to provide the best options for the following group of people, enabling them to switch to a more affordable mortgage:
- People with inactive lenders, that do not lend to new customers and can’t switch to active lender due to not meeting there criteria’s.
- Not up to date with mortgage payment, struggling with finance and therefore not eligible to switch.
- Interest only or part mortgage who have no plan to repay the capital when the mortgage matures and puts their homes at risk.
- Though up to date with mortgage payment, cannot switch due to tightened lending criteria because of the financial crisis in 2008 and are therefore mortgage prisoners.
- Peoples whose mortgage are held through unregulated entities.
What To Do
The PS19/27, titled “Changes to Mortgage Responsible Lending Rules and Guidance – Feedback on CP19/14 and Final Rules,” was developed based on feedback and consultations with mortgage lenders and consumers regarding proposed changes to responsible mortgage lending rules. This feedback and consultation process is detailed in the consultation paper CP19/14. The purpose of the guidance document for mortgage lenders was to eliminate barriers for consumers who are current with their mortgage payments, assist customers of inactive lenders and unregulated entities in transitioning to more affordable mortgages with active lenders, and reduce the time and cost associated with switching for consumers. Therefore, this initiative aimed to streamline the process for consumers and enhance accessibility to affordable mortgage options with the following:
- That mortgage lender can use a modified affordability assessment for a consumer who meets the following criteria:
- Has a current mortgage.
- Is up to date with their mortgage payments (and has been for the last 12 months).
- Does not want to borrow more, other than to finance any relevant product, arrangement or intermediary fee for that mortgage.
- Is looking to switch to a new mortgage deal on their current property.
- Inactive lenders, and administrators acting for unregulated entities, must review their customer books and contact relevant consumers to tell them it could be simpler for them to remortgage through a modified assessment criterion.
- Mortgage lenders that use the modified assessment must tell consumers the basis on the assessment and potential risks.
Reach Out To The Mortgage Lender
Contact your current lender and discuss the following;
- Do they adhere to PS19/27: Changes to mortgage responsible lending rules and guidance – feedback on CP19/14 and final rules;
- If PS19/27 guidance is applicable within their lending criteria, are you the customer eligible to complete a modified affordability assessment to switch to affordable mortgage product.
- Contact a mortgage advisor and request that they search and find a lender that does modified affordability assessments as per PS19/27 and determine whether you are eligible to make an application to switch to their affordable mortgage product.”
The most important part is to give confidence to the mortgage lender that your payment plan is viable, realistic, and attainable, and that it suits all parties. Also, you should take the initiative by referring to various latest financial mortgage guidance documents. This would highlight to the mortgage lender that you have put considerable thought and planning into creating strategies for clearing the remaining balance of the mortgage. I would recommend that you create a payment plan by discussing it with a professional mortgage, financial, or debt advisor.
Mortgage Charter
The Chancellor whos representing the government, FCA, UK Finance, and mortgage lenders, had a meeting on 23rd June 2023. From this meeting, agreements were put in place for their commitment to support mortgage borrowers through difficult times, particularly the current cost of living crisis. This agreement is in the form of a mortgage charter and are a set of standards that mortgage lenders would adopt when helping residential mortgage customers who are concerned with the higher mortgage rates.
The mortgage lenders have an extensive range of measures to help customers who are in difficult circumstances. I have mentioned a number of these within this website page and the end-of-term mortgage option website page. With this, the lenders have agreed to some of the following:
- Anyone worried about their mortgage repayments can contact their lender for help and guidance, without any impact on their credit file.
- Support for customers who are up-to-date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability check
The lenders also agreed to the following comitment within the mortgage charter:
- From 26th June 2023, a borrower will not be forced to leave their home without their consent unless in exceptional circumstances, within a year from their first missed payment.
- With effect from 10th July 2023, customers approaching the end of a fixed-rate deal will have the chance to lock in a new deal up to six months ahead. They will also be able to manage their new deal and request a better, like-for-like deal with their lender right up until their new term starts, if one is available.
- A new deal between lenders, the FCA, and the government permits customers who are up to date with their payments to:
- Reduce payments through switch to interest-only payments for six months or
- Extend their mortgage term to reduce their monthly payments and gives customers the option to revert to their original term within 6 months.
The FCA intrdocued a new policy statement, PS23/8: Mortgage Charter: enabling provisions to make changes within their Mortgages and Home Finance: Conduct of Business (MCOB) sourcebook to support the implementation of the Government’s Mortgage Charter commitment.
Other Useful Support
Disclaimer
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Cost Of Living Crisis Saving IDEAS 