Mortgage Prisoners Remortgage
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Mortgage Prisoners Remortgage
James Bull explains what a mortgage prisoner is, and what this means for a potential remortgage.
What is a mortgage prisoner?
The official FCA definition is somebody who’s got a mortgage with a ‘closed book’ lender, which is a lender that’s no longer trading. For example, lenders like Northern Rock and Bradford & Bingley are not around anymore.
How do I know if I’m a mortgage prisoner?
You would know because the lender would send you a letter, specifically stating that you’re a mortgage prisoner. You need to keep that letter, if you want a mortgage prisoner remortgage.
I’m a mortgage prisoner – what can I do? What are the options for mortgage prisoners?
There are quite a few factors that could affect you, so it depends on the situation.
The first factor is affordability. You could be a mortgage prisoner because you’ve got a mortgage now but you wouldn’t pass affordability with a traditional mortgage lender.
If those are your circumstances, there are lenders that use a modified affordability assessment.
If you want to borrow money on a like-for-like basis, those lenders will consider it even if it wouldn’t usually be affordable. You will have to pass the credit score to qualify.
The second situation is negative equity. Some people are mortgage prisoners because their properties are worth less than their mortgage amount. At the moment, we don’t actually have any lenders to help these people. Unfortunately, the likelihood is you would stay a mortgage prisoner for the foreseeable future.
Changing circumstances are another factor – such as retirement or splitting up with a partner. Again, if you’re up to date with your payments and your credit’s good, and you’ve got a letter saying you’re a mortgage prisoner, the modified affordability assessment could potentially apply.
You could be a mortgage prisoner because of your property. Perhaps it’s non-standard construction. You do still have to pass a valuation with the new mortgage lender, so it’s possible that you might be stuck where you are.
But, on the other hand, we do have specialist lenders for non-standard construction properties. So if everything else is okay and the mortgage is affordable, we may have options outside the mortgage prisoner scheme.
Finally, some people took self-cert mortgages out in the past. Those types of mortgages are no longer available – you always need full proof of income for a mortgage application. Again, if you’re up to date on the payments it could still be an option under the modified affordability assessment.
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Everyone’s different. You might be self-employed. You might have some credit history issues – whatever your situation, we will find the most suitable product available to you from across the whole market.
What are the eligibility criteria for a mortgage prisoner to get a new mortgage?
The main bit of eligibility criteria is the letter from your closed book mortgage lender, which specifically says that you’re a mortgage prisoner.
You also need to be not in any arrears on your mortgage – so you’re up to date with your payments – and you need to be not in any financial difficulty.
What would stop you remortgaging if you’re a mortgage prisoner?
If you don’t have the letter, you’re probably not a mortgage prisoner. But other things that could prevent a remortgage are negative equity, bad credit, being in financial difficulty and mortgage arrears.
Also, if there are additional charges registered against your property, such as a second charge mortgage, etc, this could also prevent you getting a new deal.
We do have lenders for bad credit mortgages, but this would not be under the mortgage prisoner scheme. The mortgage will always have to be affordable and fit the adverse credit criteria.
Can older mortgage prisoners remortgage? Are there any age restrictions for mortgage prisoners getting a mortgage?
The age criteria varies from lender to lender. It’s best for clients to contact us directly and we can give personalised advice around that.
How can mortgage prisoners improve their chances of getting a mortgage?
The main things are those we’ve discussed already. Just make sure you’re not in any negative equity, you have no credit issues and you’re up to date on your mortgage payments.
How can a broker help mortgage prisoners?
We help clients by advising them on the potential options to suit their circumstances. If you have any queries, just call us and we’ll see what we can do.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
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