Want a better deal on your mortgage?

Receive exclusive mortgage rates straight to your inbox

Call us: 0345 305 2540
Need help? 0345 305 2540
Remortgage Calculator Calculator

Government votes against SVR cap for mortgage prisoners

LATEST NEWS | 29.04.2021

Mortgage prisoners are left disappointed after MPs voted against the amendment to the Financial Services Bill which sought to bring in a cap on standard variable rates and reduce payments by up to £800 a month. 

What is a mortgage prisoner?

Mortgage prisoners are individuals who took out high-interest home loans with lenders which went under during the 2008 financial crisis. As their mortgages were sold on to investment firms that don’t offer new mortgages, many borrowers have found themselves trapped on standard variable rates as high as 9% ever since.  Many mortgage prisoners are also on interest-only deals and are unable to switch to a repayment mortgage with other lenders due to stricter borrowing criteria.  

The SVR cap for mortgage prisoners

Passed in the House of Lords on the 15th April, the amendment proposed introducing a maximum Standard Variable Rate (SVR) for borrowers stuck with inactive or unregulated lenders. The announcement came as a huge relief for many mortgage prisoners who can’t keep up with the high payments and are at risk of losing their home. New fixed interest deals would also have been created as a result of this law change, available to mortgage prisoners who met certain criteria such as not being in arrears.  However, in a House of Commons debate on Monday night, 355 Conservative MPs voted to scrap the amendment.  

What’s next for mortgage prisoners?

The UK Mortgage Prisoner Action Group which represents around 4000 borrowers is calling for a new government guarantee scheme for mortgage prisoners, much like the 95% mortgage scheme available to first-time buyers. They argue that whilst first-time buyers have no borrowing history, mortgage prisoners are borrowers who have been paying high interest rates on time for 13 years. MP John Glen announced that the Treasury would work with the Financial Conduct Authority (FCA) to review its data on mortgage prisoners, while MoneySavingExpert founder Martin Lewis is funding research to find better long-term solutions for mortgage prisoners.  As a result of the objection to the amendment, the Financial Services Bill will now go back to the House of Lords for further debate.   

Help for mortgage prisoners

New rules from the FCA mean lenders have more flexibility to help you switch mortgages. They can now use a modified affordability assessment, which means they can choose not to ask for evidence of your income and expenses or apply a stress test. Lenders can use the new rules to offer you a new mortgage as long as it will be more affordable than your current deal.  If you’d like some advice on your options as a mortgage prisoner, please don’t hesitate to contact us. Our experienced mortgage advisers can identify the lenders most likely to offer you a new mortgage, guiding you through the entire process and relieving any worries you may have.
Talk to us

If you're unsure and need some advice just give us a call, our expert team of advisers are available to help you choose the mortgage that is right for you.

0345 305 2540 info@taylormade-finance.co.uk

By clicking on the above link you will be leaving the regulated site of TaylorMade Finance Ltd. TaylorMade Finance Ltd is not responsible for the accuracy of the information contained within the linked site.

TaylorMade Finance Ltd is authorised and regulated by the Financial Conduct Authority.

Complaints:

In the event that you wish to complain, you can contact us by email, telephone or letter.

Our address for this is:
Complaints Officer, TaylorMade Finance Ltd, 4 Church Road, Urmston, Manchester, M41 9BU. Our email address is info@taylormade-finance.co.uk and our telephone number is 0161 776 1089. We will then investigate the issues raised and inform you of our findings. Should you be unhappy with the resolution to your complaint you may contact the Financial Ombudsman Service, who can be contacted at the following address: Financial Ombudsman Service, Exchange Tower, London, E14 9SR.

Email: complaint.info@financial-ombudsman.org.uk
Phone: 0800 0234 567

Your mortgage will be secured against your property.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Our fee for this service is 1.95% of the mortgage balance (minimum £1,295 to a maximum of £2,995 although reduced to maximum £1,995 without debt consolidation). Typically this will be £1,995.