Mortgage Prisoners guide - What can I do? 9 June 2021 at 4:06PM in Mortgages & endowments 25 replies 3.8K views

MWT

Gillygolly said:

WestBrom will lend to us over 8 years with a brilliant deal - we pay the same per month, but 60% is against the capital and that will in those 8 years take the debt to below 50% of the current LTV ratio.

We run our own business and in that time expect to either sell-up and pay it off or retire and downsize. 

Some lenders do require a minimum remaining term to qualify as a prisoner, with only 7 months go you would probably fail with a lot of them as 5 years seems to be a common term.

However, assuming that they have approved your repayment vehicle, have you asked WestBrom if they will take you on at the end of the remaining 7 months, or are they only prepared to do that with a prisoner letter?

Gillygolly

They are prepared to lend for 8 years, but I have to get a letter that says we are Prisoners,
But Kensington say they won't issue the letter, as I only have 8 months to run!!

MWT

Gillygolly said:

They are prepared to lend for 8 years, but I have to get a letter that says we are Prisoners,
But Kensington say they won't issue the letter, as I only have 8 months to run!!

I understand that part, but have you approached any brokers recently to see if there is a solution available when your current mortgage ends in a few months time?

The rules are very different now for interest only as you know, and a lot depends on how much equity there is in the property now if you want to use down-sizing as your repayment vehicle.

What do you think the house is worth now and how much is owed on the mortgage?

That isn't the only criteria of course but it may be worth at least seeing if it is a possibility...

Gillygolly

Yeah - thanks 
we have been referred to an IFA by WestBrom. 

The obstacles are: 
age - 63
earnings
2 buytolets that are interest only and unoccupied
mortgage is £280k 
house worth £400k +

we were offered a mortgage 2 years ago with Yorkshire but the Valuer undervalued it because there was no property selling similar - so marked it as £325k 

it just aches 

Thrugelmir

Gillygolly said:

Yeah - thanks 
we have been referred to an IFA by WestBrom. 

The obstacles are: 
age - 63
earnings
2 buytolets that are interest only and unoccupied
mortgage is £280k 
house worth £400k +

we were offered a mortgage 2 years ago with Yorkshire but the Valuer undervalued it because there was no property selling similar - so marked it as £325k 

it just aches 

Sell the BTL's problems solved. Unlike true prisoners you have options. 

Gillygolly

Yeah - obvious
but 1 is in neg equity and 2 has subsidence that Norwich union need to monitor before fixing 

In what way am i not (in your view) a prisoner?

csgohan4

Gillygolly said:

Yeah - obvious
but 1 is in neg equity and 2 has subsidence that Norwich union need to monitor before fixing 

In what way am i not (in your view) a prisoner?

You still have assets, the fact they are in neg equity or subsidence claim is not relevant. 

Most mortgage prisoners do not have other property assets.

MWT

csgohan4 said:

Gillygolly said:

Yeah - obvious
but 1 is in neg equity and 2 has subsidence that Norwich union need to monitor before fixing 

In what way am i not (in your view) a prisoner?

You still have assets, the fact they are in neg equity or subsidence claim is not relevant. 

Most mortgage prisoners do not have other property assets.

To be fair, I would struggle to classify a house in negative equity as an 'asset', it is the very definition of a liability...

Same goes for the subsidence problem, if it is not saleable it isn't really going to be part of a solution.

Even viewing them as alternative family homes would require a change in the mortgage which might be difficult to achieve.

Kensington borrowers are in a different position to many of the mortgage prisoners as they do not fit the standard definition of being with an inactive or unlicensed lender, as Kensington are still active but only in a limited market.

The real problem though is being on the wrong end of an interest only term with no repayment vehicle and insufficient earnings to meet current criteria for a repayment mortgage.

Many people who would never be classified as a 'mortgage prisoner' are finding themselves in similar circumstances for various reasons that they did not predict when taking the mortgage all those years ago...

Angelcrackers

Hello, I am wondering if we are mortgage prisoners and are looking for advice.
Took out an interest only mortgage with Future Mortgages in 2007 via a broker who gave us advice that we could borrow this much on self cert.
But the rate was quite high and as we had no choice we went for it.  Over the years it was a lot to fine and at various times we were in arrears due to periods of enforced reduced hours and other issues. The mortgage was sold or taken over by Engage Credit.
With rates going up and up now we are struggling and paying as much as we can every month but it's killing us and we are behind but Engage won't offer us a better deal.  Obvious I'm doubtful anyone else would take us either. Any help or feedback very welcome.
House is worth about 560k and we owe about 255k.

Sncjw

Can I ask what a mortgage prisoner is?