Are you one of the UK’s Mortgage Prisoners?

Standard Variable Rate

There are at least 1.4m mortgage borrowers on their lender’s Standard Variable Rate (SVR). Some would say that they are mortgage prisoners. (Source: UK Finance, June 2019 data)

This is a sizeable chunk of all mortgage borrowers and with the average SVR sitting at 4.90%, this group would be on an interest rate that’s around twice the average 2-year fixed deal cost. (Source: Moneyfacts, December 2019)

For example, if those on an SVR had a £100,000 mortgage, and were able to remortgage onto a 2-year deal, then they may end up paying around £1,700 a year less.

Mortgage Prisoners

This broadly amounts to 150,000 borrowers, most of whom are stuck with a lender that no longer lends. In these circumstances, it is understandable that people feel like mortgage prisoners. However, the Financial Conduct Authority (FCA) has introduced new guidelines, which may overcome this problem, so do talk to us to hear more. (Source: FCA, Nov. 2019)

Circumstances have changed

Some may feel they can’t remortgage because they won’t meet the stricter affordability and evidencing of income criteria. This might be true, but why not have a chat, as there may be a solution. We have helped many people who think they are mortgage prisoners.

Credit Rating – have you checked yours?

Quite apart from not being able to vote, if you’re not on the Electoral Register it may result in a lower personal credit rating score.

The role of a credit score is to try to predict your future behaviour, which means that people who have a poor score may suffer, as can those who have no credit history at all!

So do check your rating at one (or some) of the following:

Checkmyfile – Tel: 0800 086 9360 – www.checkmyfile.com

Experian – Tel: 0800 013 88 88 – www.experian.co.uk

Equifax – Tel: 0800 014 2955 – www.equifax.co.uk

TransUnion – Tel: 0330 024 7574 – www.transunion.co.uk

As every lender has its own ‘perfect customer’ profile, a rejection from one isn’t necessarily a rejection from all. By talking to us we’ll have a better feel for items which may score you down and where you might get a more favourable response for credit.

Mortgage Calculator

Monthly payments for a mortgage per £1,000 borrowed over 30 years.

Here’s how to use the mortgage payments calculator: It is based on a £100,000 mortgage over 30 years. So if you want to know your monthly cost you look up your interest rate and look at the appropriate column. A repayment mortgage charged at a 2% interest rate would cost 100 x £3.70 = £370 per month. The equivalent Interest-only mortgage would cost £167 per month.

* Excludes any payments to a separate savings scheme, to help pay off the capital amount borrowed.

• This calculator only provides a guide to monthly payments and does not guarantee eligibility for a mortgage.
• The actual amounts that you may have to pay may be more or less than the figures shown.
• Please contact us for a personalised illustration.

On our forthcoming new website, we will provide a more sophisticated Mortgage Calculator.

You may have to pay an early repayment charge to your existing lender if you remortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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There are still excellent mortgage deals on offer.