'We feel abandoned' – 13,000 mortgage prisoners transferred from Co-op Bank subsidiaries

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81997762#Comment_81997762

But they won’t all have been self certified interest only loans. Some would have been interest free with a genuine repayment vehicle. Others may have taken interest free for a few years during an expensive life stage. They could then be unable to move mortgage either due to a fall in house prices in their area meaning their LTV was too high, or maybe a drop in income meant they no longer meet salary requirements. Had they been with a lender who has been open to mortgages throughout this time, they could have kept their rates low with new deals along the way, but just because by chance they had a closed book lender they have been penalised.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81997888#Comment_81997888

In most areas, but not all and flat prices have flat lined more than houses. Also they can only sell if there is enough to repay the loan. Added to which they need to be able to afford somewhere to live!

MattMattMattUK

I fundamentally disagree with the term "mortgage prisoners", they are in a position they have chosen to remain in for more than a decade, in many cases nearly two decades, that is not a prisoner, that is an active choice. They could have left at any time, they chose not to.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81997894#Comment_81997894

Explain how they could leave if the amount owed was greater than the property value? In some areas properties dropped in value and in certain sectors eg overpriced city centre flats bought on a help to buy deal, the outstanding loan was greater than the property value.

MattMattMattUK

https://forums.moneysavingexpert.com/discussion/comment/81997899#Comment_81997899

Declare insolvency.

Emmia

https://forums.moneysavingexpert.com/discussion/comment/81997904#Comment_81997904

It's one "solution" but not without repercussions.

MWT

https://forums.moneysavingexpert.com/discussion/comment/81997890#Comment_81997890

I assume you are referring to interest only rather than 'interest free', but I would be very surprised if what you describe applies to many of these remaining 'prisoners' at this point as in large part their mortgages were relatively new when their lender failed.

The key problems for them from the start was the either the self-certified aspect of many of these, and /or a lack of equity in the property due to taking 110% or even 125% mortgages.

Net result is that their initial poor choices and a refusal to accept the losses and deal with the resultant insolvency is what has trapped them, not the closed book lender.

Had they been with a lender who has been open to mortgages throughout this time, they could have kept their rates low with new deals along the way, but just because by chance they had a closed book lender they have been penalised.

Had they been with such a lender they would have been unable to get the same mortgage in the first place …

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81997921#Comment_81997921

General advice when there is a fall in property prices is to hold on, both not to crystallise the losses and the likelihood that in the long term prices will go up. I agree that some people would have been able to escape earlier on and are now stuck. Equally there will be some people who were stuck from early on.

MWT

https://forums.moneysavingexpert.com/discussion/comment/81997934#Comment_81997934

That advice is fine for a while, but holding on for 20 years is more than a little blinkered.

I and I'm sure many others on here were active in the property market at the time these products were available and they were generally viewed as a foolish choice unless you had a rock-solid career progression in front of you and were buying property with high value growth potential, and the people who matched that profile have long moved on to other lenders.

The ones remaining should never have been able to access these products in the first place, but having done so and having no foreseeable way out of this should have taken the insolvency route long ago instead of further damaging their ability to escape with arrears and hanging on to property that was never going to let them get out of negative equity.

You are not a prisoner when the key to the door is on the wall but you just don't like the exit route.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81997948#Comment_81997948

Insolvency is a going to damage some careers as well as credit ratings particularly for getting a future mortgage; it isn’t the solution for everybody.

The advantage of hanging on to the property was that it gave them a home, and still does for all these years.