Homeowners may soon find it easier to remortgage or adjust their mortgage terms under proposed reforms announced by the Financial Conduct Authority (FCA) recently. The regulator has unveiled plans to simplify mortgage rules and encourage more competition between lenders, aiming to make the process quicker, more accessible, and less costly for borrowers.
The FCA says certain existing guidance that has “served its purpose” will be removed, reducing the administrative burden on lenders and opening the door for faster decision-making.
Easier Term Adjustments For Borrowers
One of the most notable proposed changes affects homeowners wishing to shorten their mortgage term. At present, borrowers looking to do this must undergo a full affordability assessment – a process that can be time-consuming and for some, a barrier to making beneficial changes.
Under the new proposals, the requirement for a full reassessment would be removed in some cases. This would give borrowers more flexibility to reduce their term, helping to cut the total cost of borrowing and avoid repayments stretching into retirement.
However, the FCA is clear that lenders must continue to act responsibly. Where there is a significant change to a borrower’s circumstances, affordability checks will still be needed.
Helen Ferneyhough, Mortgage and Protection Adviser at HFA Mortgage & Protection, says:
“For many homeowners, reducing their mortgage term is a smart move. It means paying less interest overall and becoming debt-free sooner. Removing unnecessary red tape could make this option available to more people. However advice is still crucial to ensure it’s the right decision for each individual.”
Simpler Switching Between Lenders
The reforms also aim to make switching to a new lender simpler for those looking to remortgage. Currently, even if the new mortgage is more affordable than the existing one, borrowers can face lengthy and detailed affordability checks.
Under the proposals, where the new mortgage is on similar terms but is demonstrably more affordable, lenders would be able to use a lighter-touch assessment. This should give borrowers access to a wider range of competitive deals and encourage more switching in the market. A move that could save consumers significant sums over time.
Helen adds:
“This is great news for anyone coming to the end of a fixed-rate deal, especially if their current lender isn’t offering the most competitive rate. Having the freedom to explore other lenders without unnecessary hurdles will make it easier for borrowers to keep their repayments as low as possible.”
Advice Still Plays a Key Role
While the changes are designed to cut bureaucracy, the FCA has emphasised that advice remains important. Lenders will still be required to identify and support customers who need guidance or may be at risk of financial difficulty.
Emad Aladhal, Director of Retail Banking at the FCA, said:
“These changes support growth by simplifying our rules, saving consumers time and money, while ensuring they still benefit from advice where needed. We want lenders to use these changes to innovate and better serve aspiring homeowners and existing borrowers.”
Helen warns that, even with simplification, getting a mortgage is still a major financial commitment:
“Borrowers shouldn’t assume that less paperwork means less need for advice. A mortgage broker can explain the pros and cons, compare the whole market, and ensure you’re not just getting an easier process, but also the right deal for your circumstances.”
Part of a Bigger Picture
These proposals are part of the FCA’s wider review of mortgage regulation. This has already prompted some lenders to adjust their lending criteria, for example, allowing certain borrowers to access larger loans.
Strong existing consumer protections, including the Consumer Duty (which requires lenders to act in the best interests of their customers), remain firmly in place. The FCA stresses that these new changes are designed to work alongside, not replace, existing safeguards.
The reforms will be voluntary for lenders, at least initially. The FCA is currently seeking public feedback as part of its broader mortgage rule review, with a discussion period open until 19 September 2025.
What Borrowers Should Do Now
While the rule changes are not yet in force, borrowers can start preparing now to make the most of potential opportunities. HFA Mortgage & Protection recommends:
1. Review your current mortgage deal – Check when your fixed or discounted term ends and whether early repayment charges apply.
2. Explore your options early – Speaking to a broker months before your deal ends can help you lock in a better rate ahead of time.
3. Consider term adjustments – If paying off your mortgage sooner is a goal, discuss whether a shorter term could work for you financially.
4. Keep your paperwork in order – Even with lighter checks, lenders will still need up-to-date financial documents.
Helen concludes:
“These proposed changes are a positive step towards a more flexible mortgage market. They could help borrowers to save money, pay off debt sooner and find deals that better suit their needs. However as with any financial decision, expert advice will remain the best way to navigate the options and avoid costly mistakes.”
Let’s Explore Your Options
Going through a separation? Let us help guide you through your mortgage options with care and clarity.
Start the conversation today
Disclaimer:
There may be a fee for mortgage advice. The precise amount of the fee will depend upon your circumstances but will range from £195 to £1500.
Your home may be repossessed if you do not keep up repayments on your mortgage.
