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I’m A Mortgage Prisoner, What Can I Do?

MORTGAGES | 13.10.2022

If you’re unable to leave your current mortgage due to your financial circumstances changing, you are deemed a ‘mortgage prisoner’. 

 

What is a Mortgage Prisoner?

A Mortgage Prisoner is a homeowner that is stuck paying high-interest rates on their mortgages due to not being able to switch to a more affordable deal. When an introductory mortgage rate ends, and you don’t move on to another deal, you are then usually placed on the lender's Standard Variable Rate (SVR), which is typically more expensive. This then results in higher monthly payments, which can often be as much as double the sum of previous payments.     The current cost of living crisis has sparked another rise in mortgage prisoners, the largest since the 2008 financial crisis when house prices plummeted, leaving many homeowners with little to no equity in their homes. Many people may have had a change in their financial situation such as a drop in income, or finding themselves in a large amount of debt, and therefore are now considered ‘high risk’ to mortgage lenders - meaning they will struggle to find a better deal.

How to escape from a mortgage prison 

Find a better deal 

Try and negotiate a new deal with your current lender if you are stuck on their Standard Variable Rate (SVR).  Failing this, you may be able to move to a cheaper mortgage deal elsewhere if you have 5 years remaining on a mortgage balance of at least £50,000 at a maximum of 75% loan-to-value (LTV). However, if you’re on an interest-only mortgage, you will also need a clear repayment plan. 

Overpay on your mortgage 

If you have any spare funds, try and overpay on your mortgage as and when you can. This will have the double benefit of paying off your mortgage early and will increase your equity. Check with your lender how much you can overpay without being charged a penalty fee. 

Downsize your home 

If you’re living in a home larger than you need, for example, if your children have now left home etc. It could be a good idea to consider moving to a smaller home, or an area where the value of properties is lower and therefore easier to get a better deal.

Increase your earnings 

If you have any skills or talents that you could capitalise on, you may be able to find a second income stream or may be able to secure a higher-paid job to be able to fund your mortgage repayments.  Alternatively, you could approach your employer for a pay rise or see if regular overtime is available to increase your earnings. 

Reduce debt and other outgoings 

Reducing debt and outgoings will help you pass lender’s Loan to Income (LTI) checks, making your acceptance for a cheaper mortgage more likely. 

Keep up with your payments

To be able to move from your current rate to a new affordable rate, lenders will want to see evidence of good credit history. You will need at least 12 months’ worth of on-time payments.      If you’re stuck as a mortgage prisoner, get in touch with a mortgage broker.  By choosing an impartial and professional advisor with a comprehensive knowledge of the mortgage market, you may gain access to your new deal and make significant changes to your finances in the process. Contact our team here. 
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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
https://www.financial-ombudsman.org.uk/

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