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Relief for Mortgage Prisoners

Whilst many mortgage borrowers have benefited in recent years from low mortgage rates it is estimated that there could be as many as 150,000 borrowers who are locked into high rate mortgages with firms that are unregulated or no longer active and cannot switch to a cheaper deal.

The City watchdog The Financial Conduct Authority (FCA) is proposing to relax the affordability checks for these customers making it much easier for them to swap to a more affordable loan.

The current checks were bought into effect in 2014 which meant that borrowers had to meet strict affordability criteria.

The proposals would apply only to borrowers wishing to secure a mortgage which is no more than their present loan but wanted to reduce their mortgage costs.

The banks and building societies will need to agree to take on such borrowers but we feel if a borrower was able to meet the higher payments they would surly be able to afford to keep up the lower payments.

This is just one of the many anomalies in the mortgage market where affordability has become such an important factor.

Its not unusual to find people in the rented sector who are regularly making rental payments well above the level of the monthly mortgage payments for which they would qualify.

If you are affected we would recommend contacting The Money Advice Service and obtaining independent financial advice.

Published 29 March 2019