What is a Mortgage Prisoner and How Can Pure Property Finance Help if You’re Trapped?

The Number of UK Homeowners with Mortgage Difficulties is at an All-Time Low

According to research by UK Finance – a lender trade body – the number of homeowners who have had their properties repossessed this year has dropped to 1,060. This is 5% lower than previous figures.

The survey also found that the number of borrowers who are behind on their mortgage payments has also fallen over the last year and is now down 8%. 76,740 homeowners were in arrears of 2.5% or more of their outstanding balance in the second quarter of 2018.

Delve even deeper into the figures and you will find 23,190 of these homeowners are more than 10% in arrears – 4% less than the number of people in the same situation last year.

Jackie Bennett, Director of Mortgages at UK Finance commented on the report:
“Arrears and possessions are at an all-time historic low since we first started collecting this data over 24 years ago. […] While this is positive, last week’s base rate rise coupled with the disappointing uptake of the Support for Mortgage Interest (SMI) loan could see arrears creeping up in the coming months.”

However, whilst many people are fixing their mortgages to pre-empt a base rate rise, one group of lenders will be welcoming an increase – mortgage prisoners.

What is a Mortgage Prisoner?

‘Mortgage prisoner’ is a term used to describe borrowers who have a home loan but do not meet lenders’ requirements to apply for a fixed rate mortgage. This is often due to the 2014 change to affordability assessment criteria.

Mortgage prisoners are able to make their current monthly mortgage payments, and would benefit from a fixed deal, but are currently on a standard or revert rate.

At the beginning of August 2018, many lenders announced they would be signing up to a set of common standards. These will help reversion rate borrowers move onto an alternative product with their existing lender.

You could be eligible if you’re an owner-occupier, are searching for a like-for-like mortgage, have more than £10,000 outstanding and have at least two years left on your current deal. That is assuming you are up-to-date on your payments.

This new availability will provide more options for people who have had a change in circumstances since taking out their existing product and therefore no longer fit typical criteria.

Shake Off Your ‘Prisoner’ Status

If you’re in a similar situation, get in contact with your lender and enquire if you qualify. Alternatively, give our friendly and knowledgeable residential mortgage brokers a call.

We specialise in finding deals for clients who have previously been turned down by high street providers and take the stress away by only presenting you with offers that suit your needs and specifications. Get in touch with the team today to see what we could do for you.