What is a mortgage prisoner?

Mortgage prisoners are borrowers who are up to date with their current mortgage payments, but have been unable to switch to better deals and competitive rates due to strict borrowing criteria that was introduced after the 2008 financial crash. They are borrowers who are held in closed mortgage books with inactive lenders or have mortgages owned by unregulated firms.

What is the Modified Affordability Assessment?

The FCA introduced the new Modified Affordability Assessment rules to help mortgage prisoners. Under the new rules, provided borrowers are up to date with mortgage payments (this will include where payments have been deferred due to impacts of COVID-19 and have not been treated as a shortfall) and are not looking to borrow any more money (except fees), lenders can choose not to apply certain affordability assessment criteria with a view to help mortgage prisoners, as long as lenders can demonstrate that the new mortgage is at least more affordable than a 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.

Am i eligible?

Under the new rules, we can offer the modified affordability assessment as part of a new application process, provided the applicant:

• Is able to evidence their current mortgage is with an inactive lender meaning they have no alternative options to switch. We would direct all prospective customers back to their existing lender or administrator or the Money and Pensions Service website to understand whether their lender is inactive and whether they may be eligible for the Society’s proposition.
• Is up to date with their 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.
• Is looking to remortgage to a new deal on their current property with the new deal being more affordable than the mortgage they are currently paying
• Isn’t 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.
• Meets all other areas of the Society’s standard residential lending policies and product limits. There are currently two products available, one at 60% loan-to-value for interest only and the other limited to 75% loan-to-value for capital repayment applications.

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 Money Advice Service website.

How do mortgage prisoners access the products?

The products are available through our mortgage advisers and selected intermediary partners. Each individual borrower will be assessed to see if they qualify for the new products under the modified affordability assessment.

If you would like to request a call to discuss your options with us, please fill out the below: