There is a lot of news on recent changes announced by the FCA and mortgage lenders to help mortgage prisoners. Vishal Gulrajani, financial adviser and mortgage broker operating in North London reviews the options for anyone who feels trapped in their mortgage and believes they have no mortgage options.
Whatever your mortgage situation we recommend contacting one of our Thomas Oliver mortgage brokers, so we can check you have taken out the best mortgage product for your financial circumstances. Contact our experienced mortgage broking team now on 01707 872000 and organise your free initial mortgage advice consultation.
What is a mortgage prisoner?
To understand how we define a mortgage prisoner we should refer back to 2014 when the mortgage market review (MMR) was introduced. MMR introduced stricter mortgage conditions and a move away from income multiples to a more affordability-based lending system. This was a good move as we all remember or have heard about the detrimental impact of the 2008 financial crisis and how easy it was to obtain finance before this, which ultimately led to the crisis.
Are you finding it hard to switch to a different mortgage deal because of MMR?
A mortgage prisoner is anyone who obtained a mortgage to buy their home before 2014 and is now finding it hard to switch to a better mortgage deal, even though they may be up to date with their mortgage payments because of MMR and the stricter affordability rules imposed in 2014.
What measures have been introduced to help Mortgage prisoners?
Now we know what a mortgage prisoner is, the question is what measures have been introduced to help. Lenders have been given the green light by the FCA to use a modified affordability assessment.
Lenders can carry out a modified affordability assessment if you:
- have a residential mortgage on your home,
- are up to date with your last 12 months payments,
- do not want to borrow more money,
- want to stay in your home
Call us now for mortgage advice as lenders can now offer you a new mortgage
Lenders can use these rules to offer you a new mortgage as long as it is more affordable than your current mortgage. It is important to note that it is up to the lender if they want to use this modified affordability assessment and each lender will have their own stipulations and risk appetite. Therefore, each mortgage lender will have different criteria and rules, so it is important you seek advice before agreeing to a new mortgage.
Vishal Gulrajani, Financial Planner and mortgage specialist in Cheshunt and Goff’s Oak said:
‘A lot of individuals will be on an interest only mortgage and one of the key factors in replacing this mortgage is to evidence a repayment vehicle that shows how you will pay off this mortgage at the end of the term. This is of course if you don’t want to switch to a repayment mortgage. Although this will be a mortgage option for some, other people will not be able to afford a switch to a repayment mortgage. If you feel you are one of these individuals don’t worry as there is lifetime mortgages or equity release mortgages for those aged over 55, as well as the option of a part interest and part capital repayment mortgage. It is important to remember that each application is unique and will be looked at on an individual basis.’
Vishal Gulrajani, Financial Planner and mortgage specialist in Cheshunt and Goff’s Oak continued:
‘Overall this is great news for mortgage prisoners as it means more mortgage options are available and this will give a lot of consumers a chance to renegotiate their mortgage at better rates. A lot of people were left in a difficult position with the 2014 MMR, but now finally mortgage prisoners are being offered other mortgage solutions. It is imperative you seek mortgage advice as each case will be treated on an individual basis. At Thomas Oliver our mortgage broking team pride ourselves on our customer service and communication. Please feel free to get in contact for a free initial mortgage consultation. Remember you have nothing to lose by having a chat with one of our qualified mortgage brokers, but it could save you time and money in the long run.’
In Summary…
If you are a mortgage prisoner or anyone looking for a new mortgage deal we recommend you call our mortgage advisors now on 01707 872000 so we can provide personalised mortgage advice for you and your family.
Your property may be repossessed if you do not keep up repayments on your mortgage.
