If you’ve received a letter from your mortgage provider stating you’re a mortgage prisoner, you might need to know the answers to some frequently asked questions.
What’s in this guide
- Do I have to use a mortgage broker?
- Am I eligible under the modified affordability assessment if I missed a mortgage payment?
- What if I took a payment deferral due to the coronavirus outbreak?
- Are there other switching options available?
- Why am I only able to use certain lenders?
- Will I be able to get a new cheaper mortgage deal?
- I want to move home so want a new mortgage on a new property – can I apply?
- I’m over 60, what remortgaging options are available to me?
- I have an interest-only mortgage, can I still apply?
Find out more about the recent changes in our guide Help available for mortgage prisoners
Do I have to use a mortgage broker?
There’s no requirement to use a broker.
However, using a broker who has this knowledge should make it easier when it comes to identifying, and applying to, a new lender.
If you want to discuss your options with a regulated mortgage adviser, download a list of firms who have an adviser able to discuss your options in more detailOpens in a new window (PDF/A, 1.4MB)
Am I eligible under the modified affordability assessment if I missed a mortgage payment?
To be eligible you must be up to date with your mortgage payments and have no missed payments in the last 12 months.
If you’ve missed a payment in the last 12 months, you won’t be eligible.
Payment deferrals taken due to the coronavirus crisis aren’t considered as being in arrears and will therefore not affect your eligibility for the new rules.
Are there other switching options available?
Absolutely. Lenders might choose to look at a number of different options to help and what is available to you will vary by lender.
A mortgage broker will know which lenders are offering different switching options.
Why am I only able to use certain lenders?
Lenders aren’t required to apply these changes, but the regulator – the Financial Conduct Authority (FCA) – is encouraging lenders to make these changes wherever possible.
Will I be able to get a new cheaper mortgage deal?
If you’ve received a letter from your mortgage lender saying you’re a mortgage prisoner you might now be able to switch to a cheaper mortgage, if you’re eligible.
However, there’s no guarantee you’ll get a new or cheaper mortgage deal – as this will depend on your individual circumstances.
Find out more in our guide Why mortgage applications are declined and what to do next
I want to move home so want a new mortgage on a new property – can I apply?
These changes only help you if you are switching mortgage on your existing home. You will not be eligible under the new rules if are looking to move home or are buying an additional property.
I’m over 60, what remortgaging options are available to me?
There are no age restrictions on the new rules. If you meet the eligibility criteria, these changes might mean you can move to a better or cheaper mortgage deal if you’ve struggled to switch in the past.
Lenders also have other option if you’re over 60, including retirement interest-only mortgages and equity release. Some of these have will have age restrictions.
It is always a good idea to speak to a broker to talk through your specific circumstances and what options may be available to you.
Find out more about retirement interest-only mortgages in our guide What is equity release?
I have an interest-only mortgage, can I still apply?
As long as you meet the eligibility criteria, you can still apply.
However, it’s likely you’ll need to have a plan to repay the outstanding mortgage at the end of its term and be able to provide proof of your ability to repay.
If you don’t have this, you should speak to your existing lender to discuss your options. This might include switching part of your mortgage to repayment (capital and interest). This will increase your monthly payments but leave you in a better position to repay your mortgage later.
If you’re worried you won’t be able to repay the mortgage, you should act now to understand your options and what you can do to improve your position. Taking action early will put you in the best possible position at the end of your mortgage, or improve your options to get a new, better mortgage deal in the future.
