Almas Uddin
Founder and Mortgage Advisor
12 Apr 2024
Many people in the UK are dealing with mortgage worries. Chancellor Jeremy Hunt has promised more help from banks, and the latest flexible mortgage news shows that lenders are also being more flexible.
Lenders Offering More Flexibility to Mortgage Borrowers
Mortgage lenders are making it easier for homeowners to tweak their payment terms. For six months, borrowers can change how much they pay each month without hurting their credit scores.
This move aims to help people manage their finances better during tough times. Banks and other lending agencies understand that everyone's financial situation can change. They want to ensure this doesn't stop people from keeping their homes.
The government has also stepped in with the Mortgage Charter, which 85% of UK mortgage market leaders have agreed to follow. This agreement means homeowners facing money troubles will find more options.
For example, these lenders have committed to only taking back a home with consent for at least 12 months if a borrower falls behind on mortgage payments. This gives you more time to sort out your finances and work out a plan with your mortgage lender, making the process less stressful and giving you peace of mind about keeping your roof over your head.
Understanding the Mortgage Charter and its Measures
The Mortgage Charter, unveiled by the government on 26 June, is a crucial step forward for borrowers facing financial challenges. With 85% of UK mortgage market lenders embracing the measures laid out in the Charter, it represents a significant commitment to support homeowners.
As the latest flexible mortgage news shows, this initiative allows individuals to temporarily alter their payment terms for up to six months without harming their credit scores. Such flexibility is monumental, giving people breathing room during tough times.
Key features include an agreement among lenders not to take legal action for home repossession without consent until at least 12 months of missed monthly repayments. This measure offers a safety net for homeowners, reducing the immediate pressure and fear of losing their homes amidst financial difficulty.
Acknowledged by the Financial Ombudsman Service, these new options underpin greater protection and assistance for those in need. Moving onto recent developments in mortgage options reveal how lenders are innovating beyond traditional frameworks to meet diverse borrower needs.
Recent Developments in Mortgage Options
Lenders have introduced new flexible mortgage deals, such as Virgin Money's and HTB's, providing borrowers with greater options. If you'd like to know more about these exciting developments, keep reading.
Virgin Money's New Flexible Mortgage Deal
Virgin Money recently launched an inventive mortgage option known as Fix and Switch. This new choice offers homeowners a lot of flexibility plus a bonus of £500 cashback. Homeowners can choose this deal for up to 90% loan-to-value, making it easier for those with smaller down payments to get into homes.
They have two options to pick from, both coming with the cashback perk.
One standout feature is that customers can change to a better agreement after just two years without facing any penalties for early monthly repayment. This aspect makes it an attractive choice for those who anticipate their financial situation might improve shortly.
The affordability check for this mortgage considers the terms of a five-year arrangement, ensuring borrowers won't stretch beyond their means. David Hollingworth from L&C Mortgages praises it as a fresh and welcome approach for homeowners looking to finance or refinance their properties with less stress over the long term.
HTB's New Flex Tracker Mortgage
Moving from Virgin Money's offer, HTB has introduced a striking option called the Flex Tracker mortgage. These unique mortgage deals cater to buy-to-let and semi-commercial property owners looking for more adaptability in their investment strategies.
The Flex mortgage term allows proprietors to enjoy the perks of tracking the Bank of England’s base rate with an added bonus. They can either fix their interest rates or sell their properties within two years without facing early repayment charges. The mortgage rate is the rate of interest that lenders charge you on your outstanding mortgage balance which can determine the size of the repayment mortgage every month.
This product shines by offering a net loan-to-value ratio of up to 75%, making it accessible for many investors and developers aiming for high-value projects. The interest rate is competitive, starting at 7.80% and stretching up to 9.50% depending on the property type and chosen plan, ensuring there's something for every financial need.
Chris Daly, HTB's managing director, underscores the bank’s dedication to pushing boundaries through broker insights, enriching both brokers' and borrowers' experiences with this innovative offering.
Conclusion
Lenders are now offering more choices to people with home loans. This means you have a better chance to find a plan that suits your budget, even when money is tight. With new products like Virgin Money's Fix and Switch, finding a deal that works for you has become easier.
The Mortgage Charter also promises extra help if you're struggling with monthly payments. Taking early action can keep your credit score safe and might prevent losing your home.
FAQs
1. What are the new options lenders are offering to borrowers?
Lenders now provide a variety of loans such as FHA loans, VA loans, and jumbo loans, along with flexible mortgage rates including fixed-rate mortgage and adjustable-rate mortgages to suit different borrower needs.
2. How do these new mortgage options help with buying a home?
These flexible loan options make it easier for people to find a home loan that matches their financial situation and get out of mortgage debt, whether they need lower down payments with FHA loans or larger amounts through jumbo loans.
3. Can I refinance my current home loan under these new flexible options?
Yes. Refinancing is an option for homeowners looking to take advantage of better pay interest rates or terms through products like cash-out refinance or by switching between fixed-rate and adjustable-rate mortgages.
4. Are there special mortgage options available for veterans?
Veterans can benefit from VA loans that offer a favorable mortgage term like no down payment and no private mortgage insurance (PMI), making buying homes easier.
5. Do the new lending options include support for investment properties?
Real estate investors have access to various types of loans tailored to property investments, including government-backed loans like FHA and conventional mortgages suitable for rental or flip projects.
6. How do I know which mortgage option is right for me?
A Mortgage broker can help you understand your eligibility based on your credit history, debt-to-income ratio (DTI), and financial goals; they’ll guide you through choosing the best loan type whether it's a conforming loan or an interest-only mortgage.
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