what are mortgage prisoners
Mortgage Prisoners are defined as borrowers, unable to Remortgage from their existing lender and unable to complete a Product Transfer with their existing lender.
This is because they no longer meet new lenders Criteria and their current Lender doesn’t offer their customers a new deal or won’t due to the applicants change in circumstance.
how do you become a mortgage prisoner
There are several situations in which a borrower could become a Mortgage Prisoner:
The primary reason is usually due to the Mortgage Lenders Criteria now being stricter than when the original Mortgage was taken out. Meaning an applicant which may have been acceptable to a lender before, no longer is. Following the financial crisis, the Mortgage market went through a comprehensive review by Regulators known as the Mortgage Market Review (MMR) 2014. Various processes and regulations were introduced to tighten up Mortgage Lenders Criteria. This was to ensure they were lending more responsibly. Part of this review was to tighten up the amount Mortgage Lenders were able to lend to borrowers. And to ban Self Cert Mortgages for the Self-Employed.
Applicants maybe in a negative equity position where their property is worth less than the value of their Mortgage.
You’ve had a change in circumstances, for example a reduction in income or now have Bad Credit.
i am a mortgage prisoner – how do i escape mortgage prison?
if you are in negative equity
Even if you are in a negative equity position, check with your existing lender to see if they can move you onto a cheaper rate. If they won’t, you will need to wait it out. Try overpay when you can to get your Mortgage down. As soon as you are in a position to get a cheaper interest rate than what you are currently on i.e. at 90-95% Loan to value, Remortgage to a new Lender or change onto a new fixed deal
There are some Lenders that have recently improved their lending criteria to permit greater lending to Mortgage Prisoners. So if you are only looking to move your existing Mortgage and not raise any additional monies. Some lenders will permit you to borrow up to 5.5 times eligible income. When usually they would only permit you to borrow up to 4.5 or 5 times their income.
The Fca is aware and has allowed mortgage lenders to make changes
The FCA has implemented changes which allow Mortgage Lenders to relax affordability. This is exclusively for borrowers who are simply looking to move their existing Mortgage on to a new cheaper product. Currently, borrowers may be up to date with repayments that are more expensive than other deals that are out there. But are unable to move onto these cheaper fixed deals which would reduce their Repayments as Mortgage Lenders affordability calculations assess the Mortgage as unaffordable. The FCA has acknowledged that this doesn’t make sense and wasn’t the reason these regulations were introduced.
if you are mortgage prisoners
There may now be options available to you which weren’t even a short time ago. Speak to one of our Specialist Mortgage Advisors which specialise in Remortgages.
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We work with a variety of Mortgage Brokers which each specialise in different Mortgage Advice areas. When you get in touch, simply select the reason why you’re getting in touch i.e. First time buyer, Bad Credit, Remortgage etc. And we will match you to the Mortgage Broker which Specialises in your circumstances.
All of the Mortgage Brokers we work with are whole of market, fully CeMap qualified, regulated by the FCA, have fair fee policies in place and have consistently great reviews.
Get in touch for a free non-obligatory conversation with one of our Specialist Mortgage Advisors for further information on how they can help you.
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Whether you’re a first time buyer or simply looking to Remortgage. Get in touch with us today, so we can put you in touch with a Mortgage Advisor which Specialises in your case.