The Mortgage Charter – A “God send” for those in Mortgage Arrears?

Lately I have been reading about the UK’s “Mortgage Charter” a recent initiative introduced by the UK Government to provide clear guidelines and support for individuals facing mortgage arrears. In simple terms, it’s like a set of rules aimed at helping distressed homeowners who have fallen behind on their mortgage payments.

The Charter can grant a grace period of up to one year and emphasises the importance of communication between lenders and borrowers, encouraging open dialogue to find practical solutions that might involve discussing repayment plans, exploring alternatives to repossession and considering options for selling quickly if necessary.

It aims to make the process more transparent and less daunting for homeowners, ensuring they are aware of their rights and the available avenues for assistance. By adhering to the principles of the Mortgage Charter, both lenders and borrowers can work together and hopefully prevent the severe impact of repossession or eviction.

Whilst in principle, the Mortgage Charter offers a commitment to fair treatment, makes the mortgage process more transparent and helps clarify the terms and conditions, it does (in my opinion) have a huge flaw! It is not a legal requirement for all lenders to sign up to and is only a commitment by those who endorse it, which for me is a weakness in the Charter. 

What I learned from this is that if you are in the market for a mortgage, it might be a good idea to ask your intended lender if they have signed up to the Charter and at least you will know how you may be treated if you run into mortgage payment difficulties.