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Iceberg ahead with The Mortgage Charter ?

Journalist: Newsteam, Newsteam

ended 30. November 2023

Had a Newspager undertake a Product Transfer with a bank, for a client who is 3m in with relief on a mortgage charter paying interest only on current fixed rate. She has 3m remaining on the charter and then will switch to a new secured rate and back on repayment - however, the new offer showed she will be paying Interest Only when the new deal starts, when it should be repayment - which confused the client and the advisor.

  • Anyone else experiencing similar problems with other lenders ?
  • Are other lenders allowing product transfers while on the mortgage charter ?
  • Have you seen an uptake on consumers having to opt for mortgage charter ?
  • Has any client experienced any issues with obtaining the mortgage charter relief ?

3 responses from the Newspage community

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Editor
Imran Hussain
Director at Harmony Financial Services
I have not personally seen this but lenders and borrowers will have a responsibility to ensure they are back on a repayment method as it's not something advisers have been giving advice on as it was a emergency measure it's been spearheaded by lenders directly.
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Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
Whilst the major lenders all seem to automatically place borrowers back onto capital repayment at the end of the six months on interest-only, their systems were not designed for mid-term repayment method changes. This is due to the cost and timescales for making such changes to systems are excessive and the government did not give lenders any time to prepare for the announced mortgage charter. Lenders clearly need to adhere to Treating Customers Fairly and ensuring the illustrations given are correct and not misleading, so will likely need to produce manual illustrations on such cases. Borrowers need to be fully aware that the future repayments will be higher to compensate for the period of only paying interest and therefore they will end up paying more over the remaining term of their mortgage. We would encourage any borrowers who are struggling to speak to a broker, and then if the mortgage charter is required to speak to their lender.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
I haven't seen any issues such as this myself, but I'm not surprised there are some. The Charter was bought in with little or no time for lenders to prepare for it, so there will be various bugs and the like in their systems that will become apparent, as they had no time to test the changes they were told to bring in. Lenders know this however and, in most cases, will be accommodating in resolving any issues that are caused by systems clashing with the Mortgage Charter.