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Help for mortgage prisoners

If you've had difficulty switching to a more affordable mortgage deal, even though you’re up to date with your payments, we may be able to help you. We offer mortgages that have been specifically designed to support mortgage prisoners.

What is a mortgage prisoner?

Mortgage prisoners are homeowners who are up to date with their current mortgage payments, but are unable to switch to a better deal because they don’t meet the strict affordability rules that were introduced after the 2008 financial crash. This is despite the mortgage payments often working out less if they were able to switch, meaning they are left trapped with their existing mortgage, paying more money than they need to.

Mortgage prisoners tend to be customers who are held in closed mortgage books with inactive lenders (i.e. those not currently offering new mortgages) or have mortgages owned by unregulated firms.

In October 2019, the Financial Conduct Authority (FCA) introduced new Modified Affordability Assessment rules so lenders, like us, could give mortgage prisoners a better chance at switching to a cheaper deal.

What are the Modified Affordability Assessment rules?

Under the new rules, lenders can choose not to apply certain affordability criteria provided they can demonstrate that the new mortgage is at least more affordable than the customer’s current deal.

Specific rules that can be disapplied include:

  • Income and expenditure assessments
  • The requirement to consider the effect of future interest rates

The Society will continue to apply other areas of lending policy.

Please note, customers must meet certain criteria in order to be eligible for the Modified Affordability Assessment rules.

Am I eligible under the new rules?

We can offer the modified affordability assessment as part of a new application process, provided you are:

  • Able to evidence your current mortgage is with an inactive lender meaning you have no alternative options to switch. You should have received a letter from your existing lender confirming you're a mortgage prisoner. If you haven't received a letter, we would recommend going back to your existing lender or administrator, or the MoneyHelper website to understand whether your lender is inactive and whether you may be eligible for one of our mortgages.
  • Up to date with your mortgage payments with no arrears or missed payments within the last 12 months on all secured borrowing that would become part of the new mortgage contract. This includes where payments have been deferred due to impacts of COVID-19 and have not been treated as a shortfall.
  • Looking to remortgage to a new deal on your current property with the new deal being more affordable than the mortgage you are currently paying.
  • Not looking to borrow any more money, other than to finance any relevant product, arrangement or intermediary fees associated with the new mortgage or to consolidate one or more secured loan.
  • Able to meet all other areas of our standard residential lending policies and product limits.

The Society will continue to apply other areas of lending policy.

As a responsible lender, if you do qualify for one of our products that support our modified affordability assessment, it is important that you consider the benefits of maintaining the mortgage payments that you currently pay where the new mortgage payment is lower as it would reduce the length of your mortgage and reduce the amount of interest you would pay, therefore reducing the total cost of your mortgage.

You can find out more information about support for mortgage prisoners and check if you are eligible on the MoneyHelper website.

How we’ve helped other mortgage prisoners

The name shown has been changed, but the case study is an example of a real customer experience.

Martin took out an interest only mortgage with Northern Rock in 2001. When the company collapsed, his mortgage was then sold to a firm called Cerberus. Unfortunately from then on he struggled to get another mortgage, largely because his and his wife’s joint income was too low to pass some affordability checks – even though the mortgages were cheaper than the one he had at the time.

When Martin found out about our plans to help mortgage prisoners, he applied directly. We helped Martin cut his interest rate meaning his monthly payments were halved from £886 to just £401 a month – a huge saving of £485 a month.

How to apply

If you believe you are a mortgage prisoner and would like to request a call with one of our mortgage advisers to discuss your options, please fill out the form below:

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