The Mortgage Charter - support for residential UK mortgage holders
We know recent changes to mortgage rates might make your clients feel uncertain about how their mortgage payments could be affected. The government has been working with the Financial Conduct Authority and lenders to put the Mortgage Charter in place, which offers support for UK mortgage holders. Barclays is fully committed to helping our mortgage holders and has signed up to the charter. Your clients can visit our mortgage support hub for full details, including how they can apply for the agreed options and access the application form.
As part of the Mortgage Charter, customers with a residential mortgage can apply to reduce their mortgage payments by either switching to an interest-only mortgage for six months or extending the mortgage term. Customers can apply for either of these options without a new affordability check, and we won’t report it (negatively) to credit reference agencies. Customers cannot apply for both options on one mortgage account.
Additionally, as living costs rise, keeping on top of money might be worrying for some of your customers. We’re here to help with some tips and tools on money management to budget better and find ways to cut back and save or should your customers have money worries.
Mortgage Charter support
Customers can apply for one of the following per individual Mortgage account
Switching to an interest-only mortgage
If customers have a repayment or part-and-part mortgage, they can apply to switch to interest-only payments for six months.
This would make your customers monthly payments lower during this six-month period but would increase the overall cost of their mortgage over its full term, as they won’t be paying off any of the capital during this time.
Once your customers revert to their original capital and interest repayment after the support ends, their monthly payment amount will be higher than before because they won’t have paid off any capital during the switch to interest only.
Extending the mortgage term
Customers can apply to extend their term so they repay it over a longer period, which will reduce their monthly payments. Doing this will mean their mortgage will cost more over the full term, as there’ll be more interest applied. They can stick with the extension or can choose to go back to your original term within the first six months. Their payments will be more than they were before the term extension if they choose to do this.
Customers also have the option to do a ‘partial reversion’ – this allows them to change the term so it’s between the original term and the extended term. For example, if their original term was 10 years and they extended to 20 under the Mortgage Charter, they could change it to 15 years.
Customers cannot extend their term past their planned retirement age, or when the oldest applicant turns 70, whichever is sooner.
If your customers decide to change their mortgage term after 6 months, when the support ends, this will be subject to our standard affordability checks.
How can customers find more details and apply for additional support?
If your customers need help with their mortgage payments, including details on how to apply for a term extension or interest only period, please direct them to the mortgage support hub where they will find all the relevant information.
- There are some requirements customers will need to meet to apply for six months of interest-only payments, or a term extension, for example being up to date with their mortgage payments. This means they do not have an outstanding balance of £50 or more across all their mortgage accounts.
Full details are on the support hub
The support hub includes a Mortgage Charter calculator that customers can use before they apply, to make sure this is right for them. It’ll show:
- How switching to interest-only will change their monthly payments during the support period and after it ends
- How extending the term will impact their monthly payment
- How any changes will affect the total overall cost of their mortgage.
They’ll need a few details about their mortgage to use the calculator such as mortgage balance and remaining term.
If they’ve recently applied to switch rates (even if this hasn’t taken effect yet), customers can also work out what their monthly payments would be with the new rates.
If your customers are worried about making their next monthly payment, please ask them to call us on 0333 202 7407* so we can look at the best way to support them. We’re here Monday to Thursday, from 8am to 8pm, Fridays from 8am to 6pm and Saturdays from 9am to 1pm.
- Customers can apply for support under the Mortgage Charter no matter how long they’ve had their mortgage. Customers will need to have more than 6 months remaining on their mortgage term to benefit from a switch to interest only or term extension.
- If the application is successful, the new monthly payment will start from the month after customers apply. If the next payment is due within 14 days of us approving the application, it’ll start from the following month. We’ll confirm the payment date and amount when we approve the application. Customers should not change or cancel your Direct Debit – we’ll change the amount automatically.
- If you have already applied for a rate switch (product transfer) for an existing customer, this will go ahead as planned and we’ll apply it to the six interest-only payments. We’ll send customers an updated payment breakdown at the end of the six-month period.
- Customers cannot extend their term past their planned retirement age, or when the oldest applicant turns 70.
- You can submit a new rate switch application if customers have already applied to switch to interest-only payments or extend their term.
- Customers can apply for Mortgage Charter support if they have a help-to-buy mortgage or shared ownership.
- Your customers will need to make a separate application for each account that they hold with us if each account meets the requirements. They can apply for support on each mortgage, regardless of whether it’s more than one mortgage for the same property or several mortgages on multiple properties.
- If customers have a joint mortgage, they’ll need the permission of all account holders to make the application.
Customers must remember, that whilst taking either Mortgage Charter support option will decrease their payments today, it will increase the amount of interest paid and their total mortgage cost over the full term of the mortgage. For customers taking a 6-month interest only switch, their monthly payments will be higher than before once the support ends and the mortgage reverts to capital and interest repayment.