Spellman Financial Services
Mortgage prisoners may be able to remortgage
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What are Mortgage Prisoners?
You may have heard the term ‘mortgage prisoners’ but not know exactly what it is.
Mortgage prisoners are those who are trapped in their current deal as they are unable to remortgage or move.
Mortgage Prisoner Example
“We currently owe £400,000 and still have 20 years to go on our mortgage, but we’re stuck on our lender’s SVR at 4%.
This means our monthly repayments are a hefty £2,400.
Unfortunately my work circumstances changed last year, meaning we can’t pass the affordability check on a new mortgage.
If we were able to switch to a fixed rate mortgage, could save us almost £500 every month.”
How do you become a Mortgage Prisoner?
The Financial Conduct Authority (FCA) has estimated around 150,000 borrowers are stuck as ‘mortgage prisoners’. Some of the main reasons are —
— A change in circumstances, such as credit issues or a lower income since they bought their home.
— Not meeting the affordability rules which changed in the 2014 Mortgage Market Review
— Negative equity – which could be due to the 2007/08 financial crisis
— Being stuck on your current mortgage deal can be a costly frustration.
Those that come to the end of their existing deal may be moved onto a lender’s Standard Variable Rate which can be expensive, with average rates higher than many available deals. In some cases, this could be more than double the rate of interest.
How to choose a Mortgage Broker
After a campaign by a group of ‘mortgage prisoners’, who originally mobilised via social media, the FCA has proposed plans to help people move to a cheaper deal.
Customers who are both up-to-date with payments and looking to remortgage without additional borrowing will be given a more appropriate affordability assessment to assert whether they can afford the new loan.
This will make it easier to find the right mortgage for their needs. The FCA is also asking lenders to work with more innovative tools to help customers better identify what mortgages they may qualify for.
If you are thinking of remortgaging, expert advice is important to help you navigate through, let us save you time and hassle by doing all the leg work for you.
Why use ourselves
We are rated 5 stars by our customers on Google, Vouched For & Facebook.
We can provide face to face advice to customers in Coventry & Warwickshire. Or a telephony service if you prefer, for Local or National Customers.
Luke Spellman, the Mortgage Broker you will speak to, has over 10 years experience in Financial Services. 5 of which has been spent working directly with Mortgages.
So for simply more information and for a non-obligatory free chat. Please contact us below.
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