TSB includes buy to let in Mortgage Charter

TSB is the first lender to include buy to let mortgage borrowers in Jeremy Hunt’s Mortgage Charter help scheme with big banks, which initially sought to ease cost of living for residential mortgage holders.

Since Chancellor of the Exchequer, Jeremy Hunt, announced the ‘Mortgage Charter’ help scheme in June, 43 lenders have signed up to the initiative – making up 90 percent of the mortgage market.

Jeremy Hunt’s help scheme has been primarily been aimed at residential mortgage holders, and has been criticized by Shadow Chancellor Rachel Reeves for excluding buy to let borrowers; TSB is the first mortgage lender to include buy to let borrowers into the scheme.

The Mortgage Charter is a voluntary scheme lenders can sign up to, which includes measures to aid borrowers amid the ‘cost of living crisis.’ Measures for borrowers include:

• Temporarily switching to interest only repayments
• Extending their mortgage term by up to 6 months
• Temporarily deferring payments

And that:

• Repossessions won’t start until a year after the first missed payment.

TSB’s financial support director, Nicola Bannister, has said:

We have a range of ways to help all TSB customers impacted by the rising cost of living – including those worried about their mortgage payments both on residential and buy-to-let properties. We continue to encourage those customers to contact us as soon as possible.

Paragon CEO, Nigel Terrington, has also said that while the help scheme didn’t include buy to let borrowers, the lender was following the measures and would sign up if required to.

Will the Mortgage Charter measures help landlords?

Reflecting on the potential sources of help, Chief Executive of specialist mortgage broker Commercial Trust, Jorden Abbs, says:

The Mortgage Charter may be better suited for residential mortgage holders, as the measures included don’t really benefit buy to let borrowers in the same way.

Many landlords are already on interest only payments, and so temporarily switching to interest only provides no change for them.

Neither is extending their mortgage term by up to 6 months, as this won’t reduce monthly payments if it is interest only.

Temporarily deferring payments won’t affect your credit profile, but, as with Covid-19 deferments, they could cause problems when re-mortgaging. We saw some lenders review missed payments related to the Covid pandemic, and take the view that - as a landlord is expected to have a contingency for missed rental payments – the lender was not prepared to issue a mortgage.

And with the promise that repossessions won’t start until a year after the first missed payment, while this can be helpful, most repossessions don’t start a year after the first missed payment anyway, since legal proceedings typically take a while to go through courts.

So whilst I welcome TSB extending the existing Mortgage Charter measures to property investors, I would argue that a more tailored approach to landlords should be considered for this part of the sector.

With the current economic climate, now more than ever there is a need to make sure the mortgage you choose fits your financial situation -so make sure to seek expert advice.

Commercial Trust is a specialist buy to let broker that has access to over 80 lenders across the UK. We work with our clients and use our expertise to find them the most competitive deals across our wide range of lenders, and once we have secured a deal, we fill out the application on our clients behalf – making the whole process much more stress free. Enquire here.