§ Mr. Peter Bottomleyasked the Secretary of State for the Environment when he intends to make it easier to switch between ordinary mortgages and option mortgages.
§ Mr. StanleySection 114 of the Housing Act 1980, which came into operation on 3 October, makes it easier for borrowers to switch between ordinary tax relief mortgages and option mortgages. Details of the new arrangements are being published today in a Department of the Environment leaflet "Switching between an 3W ordinary and an option mortgage", copies of which have been placed in the Library, the changes, which will help borrowers who wish to alter their mortgage arrangements in line with changes in their personal circumstances, are as follows:
- (a) for the first time a person with an ordinary mortgage has the right to switch to an option mortgage
- (b) a borrower with an option mortgage can now switch to an ordinary mortgage after only one year instead of four as under previous arrangements
- (c) switching into the option mortgage scheme on hardship grounds is also easier.
Borrowers wishing to use their right to switch after they have had their mortgage for one year must give their lender three months' notice; and the switch then takes place on the next 1 April. A borrower wishing to switch on 1 April 1981 must therefore give notice by 31 December 1980.
Borrowers who wish to switch into the scheme on hardship grounds may now do so at the beginning of any month, provided they give their lender three month's notice. Such a switch will still require their lender's agreement, and his decision will be final. Borrowers who have already given notice to switch from 1 April 1981 on hardship grounds should re-apply if they wish to switch earlier under the new provisions.
Borrowers can normally exercise their right to switch only once during the life of their mortgage. It is only possible tto switch in one direction and then back again if one switch is to an option mortgage on hardship grounds.