Mortgage Charter
In June 2023, the UK Government introduced a Mortgage Charter. It’s been set up to give customers with residential mortgages extra support if they’re worried about keeping up with their payments.
You have three options:
- Apply to switch to a new mortgage rate up to six months before your current deal ends
- A temporary switch to interest only payments for six months.
- Extend your mortgage term.
You can apply for support with no affordability or credit checks needed. This means we won’t assess your income or outgoings and your credit score won’t be negatively affected.
We also won’t repossess your home within 12 months of missing your first mortgage payment if your account isn’t brought up to date.
You won’t be able to apply for Mortgage Charter support if:
- Your account is in arrears
- You need help with your Buy to Let mortgage.
Don’t worry though – we can help you in other ways. Visit our help and support page if you’ve unpaid mortgage payments outstanding or think you’ll struggle to make your next payment.
You could benefit from getting a new deal if you’re a landlord whose payments are up to date and your mortgage is on a variable rate, or a fixed rate that ends within the next six months.
What does a switch to a new mortgage rate mean for me?
If you have a fixed rate mortgage with us, your payment is set at a specific interest rate for a certain period. This can be good for budgeting as your payments will stay the same during that time. It does mean you won’t benefit if the Bank of England Base Rate or our Standard Variable Rate decreases.
When your fixed period ends, you’ll move on to a variable interest rate. This rate will link to the Bank of England Base Rate or our Standard Variable Rate. This means if the rate your mortgage links to goes up or down, so will your payments.
Currently, you can apply to take out a new fixed rate if you’re within six months of your current mortgage deal ending. The new rate will take affect when your current deal ends.
You may also apply if you’re already on a variable rate depending on the terms of your mortgage.
How do I know what rates are on offer?
The rates on offer will depend on which brand you took your mortgage out with. Take a look at our Bank of Ireland rates or Post Office rates to see what’s available. Use our calculator to work out how switching to a new rate could affect your monthly payment.
How do I apply to switch my mortgage rate?
You can apply for a new rate:
- With a recommendation. We’ll fully assess your circumstances and suggest a rate that we think best suit your needs
- Without a recommendation. We won’t make any assessment and you’ll choose a rate which you think is best for you. Please read our Execution Only Disclosure (PDF) for more details.
If you prefer, you could talk about your options with a mortgage broker instead.
We can withdraw our rates at any time and without notice.
What if I’ve applied to switch my rate and a better deal becomes available?
When you’ve applied for a new rate, you can change your deal or cancel your request up to two weeks before your new rate is due to start. Just get in touch to let us know.
We can withdraw our rates at any time and without notice.
What does a switch to interest only mean under the Mortgage Charter?
You should continue to make your current mortgage payments if you can afford to, as temporarily switching to interest only will cost you more in the long run.
You can apply for a switch to interest only for six months if you want help with your residential mortgage payments and:
- You’ve at least one year before you pay off your mortgage
- All or part of your mortgage is on repayment
- You’ve made your first mortgage payment
- Your account isn’t in arrears.
Switching to interest only payments means that your monthly payment will be lower as you’ll only pay the interest charged on your mortgage balance (the capital). Your balance outstanding will stay the same during this time.
Once the six-month period has ended, your mortgage will automatically go back on to repayment. Your payments will be higher than before as it will include the capital that you didn’t pay whilst your mortgage was on interest only. We’ll spread this over the rest of your mortgage term.
The interest you’ll pay back overall will also be more, so the total cost of your mortgage will be higher.
We don’t recommend which support under the Mortgage Charter is best for you.
You should think about switching to a new mortgage rate if you’re on a variable rate or a fixed rate that’s due to end within the next six months.
How much would a temporary switch to interest only cost me?
We recommend using our calculator to understand how a switch to interest only for six months could affect your mortgage.
How do I apply?
You can only apply directly through us, in one of two ways:
- Send us a request by post.
Please read our Execution Only Disclosure (PDF) before completing the form. It explains what it means to request a change to your mortgage without any recommendation from us.
Don’t have a printer? Don’t worry. You can ask us to post you one. Please allow up to five working days to send you the form.
- Call us on 0345 300 8000*, then press option 6.
What happens if I still struggle to make payments during or after the interest only period?
You should contact us straight away. Visit our help and support page for details.
What does extending my term mean under the Mortgage Charter?
You should continue to make your current mortgage payments if you can afford it as a term extension will cost you more in the long run.
Extending your term will make your monthly payment lower as it will take you longer to pay off your mortgage. However, it means you’ll pay more interest overall so the total cost of your mortgage will be higher.
You can apply to extend your term if you want help with your residential mortgage payments and:
- Your mortgage is currently on a repayment basis. This is because your payment wouldn’t change if your mortgage were on interest only
- You’ve made your first mortgage payment
- Your account isn’t in arrears.
Some things to be aware of:
- We’ll change the term for both your accounts if you have a mortgage currently on part interest only and part repayment basis. Your interest only payments will stay the same
- You can increase your current term up to 35 years from the date your mortgage started
- The new term must not take the eldest borrower past 75 years of age or their expected retirement age, whichever is earlier.
We don’t recommend which support under the Mortgage Charter is best for you.
You should think about switching to a new mortgage rate if you’re on a variable rate or a fixed rate that’s due to end within the next six months.
Can I reduce my term again in the future?
Under the Charter, you can choose to go back to your previous term within the first six months. There will be no affordability checks and your credit score won’t be negatively affected. Your payments will be higher than before as you’ll have paid less off your mortgage balance during the extension period.
You’ll need to tell us if you want to change your term back. You can message us from your hub or call us on 0345 300 8000*.
We’ll need to make sure your payments are still affordable if you want to reduce your term after the first six months. We’ll assess your circumstances and carry out a soft credit check, which won’t affect your credit score.
How much would a term extension cost me?
We recommend using our calculator to understand how a term extension could affect your mortgage. You can enter different term lengths to see which term is most suitable for you.
How do I apply?
You can only apply directly through us, in one of two ways:
- Send us a request by post.
Please read our Execution Only Disclosure (PDF) before completing the form. It explains what it means to request a change to your mortgage without any recommendation from us.
Don’t have a printer? Don’t worry. You can ask us to post you one. Please allow up to five working days for us to send you the form.
- Call us on 0345 300 8000*, then press option 6.
* Calls are recorded for training and monitoring purposes. Lines are open 9am – 5pm Monday to Friday. We’re closed on Bank Holidays. 03 calls cost no more than calls to geographic numbers (01 or 02). Calls from landlines and mobiles are included in free call packages.