Mortgage charter and move to new deal

ACG

If there was no Mortgage charter, you could do a product transfer without going through the underwriting process again. 

As you are using the mortgage charter to lower your monthly repayments, that suggests you cant afford your mortgage. That also means you will likely be classed as vulnerable (nothing wrong with that btw, it just means lenders/brokers etc have to sort of go the extra mile to ensure the best decision is being made for the longer term and short term). 

By tying you into a new product is that lowering your monthly repayments from where they are now (or pre-interest only)? If not then how will you pay the mortgage as you cant pay it now. Although they are lowering your repayments from SVR, they are also tying you into a period with early repayment charges. 

Due to consumer duty, vulnerabilities are now at the forefront of what we have to look for and there will be an argument that using the mortgage charter would put  you in that category. That might mean they want to spend a bit more time with you to ensure its the right decision. 

It sounds like Virgin money will want you off the mortgage charter so they can avoid classing you as vulnerable. I am not sure that is really how consumer duty was intended but it might work in your favour for an easy life. 

(I have just read that back, none of what I said is being judgemental although it might come across like that - sorry if it does. I just sort of find being direct works better than beating around the bush). 

rugbyrod25

No thank you, its useful, i guess from my point, i will need to call them in March and discuss options, but sticking me on the SVR cant possibly make sense for them? that's just my simplistic mind working!!! 

Hoenir

rugbyrod25 said:

No thank you, its useful, i guess from my point, i will need to call them in March and discuss options, but sticking me on the SVR cant possibly make sense for them? that's just my simplistic mind working!!! 

Relax. People have temporary financial difficulties for all manner of reasons. As has been suggested. Return to normal. Then see what options are vailable to you. 

rugbyrod25

Thank you everyone for their input, much appreciated. will let you now outcome so anyone else in this position can understand. 

ACG

rugbyrod25 said:

No thank you, its useful, i guess from my point, i will need to call them in March and discuss options, but sticking me on the SVR cant possibly make sense for them? that's just my simplistic mind working!!! 

To a degree. 
But if you struggle to make the payment on say a 2% mortgage, what sense would it make tying you in to a 4% mortgage? OK it is better than paying SVR at say 8% but ultimately you are tying yourself into a mortgage (and the associated early repayment charges). 

The better option might be to leave you on interest only whilst you sell the property. That avoids the ERC. 

MWT

rugbyrod25 said:

...i'm on interest only, so the capital will be added to the term of the mortgage.

Just on that one point, is that a decision that has already been discussed and made, or is it an assumption?

After the interest only period ends, there can be three option...

#1 Make an additional payment to cover the missing capital payments so the monthly repayment and the term remain the same .

#2 Extend the term so the monthly repayment remains the same as it was before the interest only period.

#3 Increase the monthly repayment so the term remains the same.

rugbyrod25

Sorry for the confusion , the mortgage charter option was a short term solution whilst I sorted something out, paying my mortgage was never an issue and going forward isn't a problem, I have no intention of selling, so will look at a new fixed deal which will encapsulate the extra captial, no change to the term, so the payment will more alongside the hike in interest rate on the fixed deal.

rugbyrod25

Out of interest because my intention is not to sell and i want a fixed rate deal, i know someone mentioned its a not a commercial model for lenders to keep you on the SVR, but if and that's a big if, they decide to keep me on it, isn't that tantamount to actively forcing me to pay more even though i can show i can afford the fixed rate deal and no have had no prior issues (appreciate i have had a couple months of charter support). i might come off even earlier to show i can keep on track???

Hoenir

rugbyrod25 said:

Out of interest because my intention is not to sell and i want a fixed rate deal, i know someone mentioned its a not a commercial model for lenders to keep you on the SVR, but if and that's a big if, they decide to keep me on it, isn't that tantamount to actively forcing me to pay more even though i can show i can afford the fixed rate deal and no have had no prior issues (appreciate i have had a couple months of charter support). i might come off even earlier to show i can keep on track???

Wherever you've got information from previously. It's far removed from how mortgage lenders actually go about their daily business. Shouldn't be underestimated how tightly residential mortgage lending is regulated and the manner in which lenders are required to conform. 

rugbyrod25

Hoenir said:

rugbyrod25 said:

Out of interest because my intention is not to sell and i want a fixed rate deal, i know someone mentioned its a not a commercial model for lenders to keep you on the SVR, but if and that's a big if, they decide to keep me on it, isn't that tantamount to actively forcing me to pay more even though i can show i can afford the fixed rate deal and no have had no prior issues (appreciate i have had a couple months of charter support). i might come off even earlier to show i can keep on track???

Wherever you've got information from previously. It's far removed from how mortgage lenders actually go about their daily business. Shouldn't be underestimated how tightly residential mortgage lending is regulated and the manner in which lenders are required to conform. 

Thanks for the response, it was just a hypothetical situation, appreciate its probably not how lenders would act.