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The Government has introduced new rules that will seek to further aid the millions of people struggling with adverse mortgage finances.

The Financial Services Authority has revealed that it is considering proposals that would see no additional charges are incurred by a mortgage borrower where a formal agreement between lender and borrower is in place. This is great news because for struggling mortgage borrowers, to have an additional £30 or £40 monthly arrears charge added to your mortgage balance, despite having agreed a repayment plan with your lender was merely compounding the problem for those doing their utmost to stave of the threat of repossession.

Things are still tough for many mortgage holders right now: the Council of Mortgage Lenders says that 194,600 mortgages in arrears by 2.5% or more of their outstanding balance. For these people all the good advice in the world wouldn't stop the blow of additional surprise payments.

Andrew Hagger of Moneynet.co.uk says: "This will be welcome news to thousands of genuine people who are battling to keep a roof over their heads. With unemployment running at a 13 year high of just under 2.5 million, there will be a lot of people struggling to meet their mortgage repayments due to circumstances beyond their control.

"It's hardly treating customers fairly to for lenders generate additional profits by charging arrears fees to people who are adhering to temporary reduced repayment plans."

Sue Edwards, head of consumer policy at Citizen's Advice says: "That the FSA compel lenders to consider all options before repossessing and the confirmation that arrears payments made by borrowers must be allocated to clearing missed monthly payments first, before they pay off charges.

"The strengthening of these existing rules will help protect vulnerable homeowners from avoidable homelessness and we hope to see them implemented as soon as possible."

SOURCE: CML, Sep 09, Moneynet, CAB, FSA, 26/01/10

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