Chancellor Jeremy Hunt has agreed three measures with lenders to help mortgage holders struggling with increasing rates.
Following a key meeting with heads of banks and financial institutions at Downing Street, Hunt told broadcasters that lenders agreed to allow those struggling to extend the terms of their mortgages or move to an interest-only plan temporarily with “no questions asked”.
“There are two groups of people that we are particularly worried about,” Hunt said.
“The first are people who are at real risk of losing their homes because they fall behind in their mortgage payments.
“The second are people who are having to change their mortgage because their fixed rate comes to an end, and they’re worried about the impact on their family finances of higher mortgage rates.”
Hunt said during the meeting, banks and lenders came to an agreement on three things.
The first is that anyone can talk to their bank or their mortgage lender and it will have no impact on their credit score, he explained.
“That’s really important. A lot of people worry about that.
“The second is that if you are anxious about the impact on your family finances and you change your mortgage to interest-only or you extend the term of your mortgage and you want to go back to your original mortgage deal, within six months, you can do so, no questions asked.
“No impact on your credit score.”
Hunt explained this will provide people with a lot of comfort and stop them worrying about having conversations with their banks when they are worried about their financial situation.
“The final thing is for people who are at risk of losing their home in that extreme situation, the banks and mortgage lenders have a number of things in place,” he said.
“The last thing that they want to do is to repossess a home, but in that extreme situation they have agreed there will be a minimum 12-month period before there’s a repossession without consent.”
sonia.rach@ft.com
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