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Many mortgage prisoners have found themselves trapped on their current mortgage deal, unable to switch to a better, and often cheaper product. But things are looking up as the FCA recognise the struggles mortgage prisoners are facing and has made changes to the current lending rules.
A mortgage prisoner is someone who isn’t able to switch from their existing mortgage deal to a new one. This can be incredibly frustrating as it often means you can end up paying more money than you need to, as once the discount period of your current mortgage has come to an end, you’ll fall onto the lender’s Standard Variable Rate (SVR) which is often more expensive than what you were paying before.
There are a few different reasons why you might find yourself stuck in this position…
1. House prices fell during the financial crisis back in 2007/8 which meant that many homeowners lost equity in their homes.
2. New rules under the Mortgage Market Review (MMR) of 2014 has introduced stricter lending criteria that many mortgage prisoners do not meet, hence why they’ve found themselves trapped on the same deal.
The Financial Conduct Authority (FCA) has announced that they have some concerns over certain people not being able to switch to a more affordable mortgage, even though they’ve never missed, or been late with their repayments.
As a result of this, the FCA are now altering their responsible lending rules and guidance to help those who are stuck on an expensive mortgage, move to a more affordable one.
So, if you already have a mortgage and aren’t behind with payments, a lender can now choose to change their affordability assessment but only if you’re looking to switch deals without borrowing more money.
If you’ve been struggling to remortgage for a while then now might be a good time to get in touch with a mortgage adviser to see if you qualify to the new lending rules.
Our mortgage advisers have access to over 90 lenders and can compare over 12,000 mortgage products to find the right one for you. Please feel free to contact our friendly team today on email@example.com to find out more about the new lending rules and how you might be able to save money on your mortgage.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.