What is a Mortgage Prisoner?
Due to changes in affordability requirements following the 2008 financial crisis there are an estimated 140,000 borrowers who are unable to switch to a better deal; many are paying high interest rates with closed book or un-regulated lenders. The FCA has identified these customers as ‘Mortgage Prisoners’.
Is the Mortgage Prisoner process available to all brokers?
No, the FCA have an approved list of firms that are allowed to undertake the extra steps required as part of the Mortgage Prisoner scheme. Mortgage Prisoner firms have been approved by the FCA directly to complete these extra steps. Brokers wishing to join the scheme should contact the FCA themselves to enquire.
What are linked unsecured loans?
Loans which are linked to, but not a part of the mortgage.
For example: The Together Mortgage issued by Northern Rock pre-2008 allowed customers to borrow up to 95% of the value of their home on a secured basis, and in addition take out a fixed sum unsecured loan of up to 30% of the value of the property, capped at £30,000. As these unsecured loans were part of the mortgage, we are able to re-mortgage them as part of Mortgage Prisoner applications.
How do I Identify linked unsecured loans?
If you are consolidating a linked unsecured loan you will need to provide evidence that this is as described in the “what are linked unsecured loans” FAQ. This will require original paperwork or confirmation of the link from the customer’s current lender to be provided as part of case packaging.
Without this confirmation the application will not be able to proceed
What's the maximum LTV for consolidation?
There is no difference to our normal criteria for debt consolidation.
Why has my client received an additional letter at the point of offer?
This letter informs the customer that we have used their track record of making mortgage payments as part of a proportionate affordability assessment.
How do Mortgage Payment Holidays and furlough affect Mortgage Prisoners?
All coronavirus, furlough and other policies apply to these applicants.
Mortgage Prisoners must evidence that they have made all required payments in the last 12 months. An agreed payment holiday is not a ‘missed’ payment.