Mortgage Holders: Will a Law Change Finally Offer an Escape?

This is Money spoke to three mortgage prisoners about the impact it has had on their lives. Some of them are enjoying temporarily lower fares, thanks to Covid-19 – although it is not known when this temporary respite ends.

Claire Johnson, 57, from Sheffield: highest interest rate paid 5.4%

Claire Johnson, pictured with her nephew, says she was worried about taking out a 100% mortgage but was reassured by a financial advisor

I took this house eighteen years ago with a mortgage from Northern Rock Together.

I used to own an apartment, but when I got married and had my daughter, it wasn’t ideal for a little one.

The independent advisor who came to see me said, “This is the one you want, the Together mortgage”.

I was a little apprehensive – it was basically a 100% mortgage. I had always worked, just as a legal secretary, so I didn’t make a fortune, but I did. But the advisor said I could afford it.

My husband was helping me at first, but later that year he left.

I stayed in the house, struggled, and then when Northern Rock went bankrupt I got a letter through the door saying my mortgage was now with NRAM. I didn’t know who they were.

I really, really struggled. These are the rates: I’m currently at 5.4 percent. When you think about what other people are paying, and what I’ve been paying all this time … how I didn’t sink, I don’t know.

I got into debt: I had never, never been in debt before that. I have always had a good credit rating. This is something that really moved me. I’m not in negative equity now, but I was for a long time.

You’ve just been planted there, you’re stuck and you can’t move, it’s very difficult. It’s like having a brick tied around your neck and you might as well jump into the river.

I’ve never been on vacation and haven’t decorated since moving in because I couldn’t afford it. The only room I decorated was my daughter’s bedroom as it was bubblegum pink with fairies and she was a teenager at the time.

It had a huge impact on my daughter, who is now 21. The reason I didn’t want to lose this house was because I didn’t want to drop it.

You go without everything – to school, it was embarrassing because I didn’t have money for travel and everything.

Other kids might go to the movies on the weekends, but we went to the library as her Friday treat. Little things like that make you feel like second-class citizens – just because I’m in this situation that I shouldn’t have been in.

My daughter is now in college where she is in her final year and online for a first grade.

I’m really proud of her – but I didn’t feel like a good mom because I couldn’t send her money. Without my mortgage, I could have done it. I had a lot of mental health issues because of this, which I still suffer from.

It would be ideal if we could lower the rate or be able to change. If we can afford what we’re paying now and switch to a new provider at a better rate, of course we can.

Rachel Neale, 42, from Hinckley in Leicestershire: highest rate paid 5.75%

My husband and I took out our interest-only mortgage together with Northern Rock in 2006.

Our independent advisor told us that this was one of the best products on the market, and that we could do two years on interest only and then move on to a repayment mortgage.

This suited us as we were about to get married, it was our first home and it freed us up some money.

At the end of 2008, we tried to switch to a repayment mortgage – but the crash had happened and everything had changed. They told us that we had no longer embraced affordability and had to stick to interests only.

Over the years I became seriously ill with Crohn’s disease and at one point was hospitalized for about a year. It affected my husband’s business, and we fell into arrears, but we completely caught up.

Our house has become totally unsuitable. It starts to make you really uncomfortable and quite miserable see this site

In 2016 our mortgage was transferred from NRAM to Landmark and we asked again if we could move on to repayment.

They said that because of our interest rate, which was about 5.75%. We just couldn’t afford it.

They also said that because they did not have a loan license, they would not be able to offer us other products. We were really completely trapped.

Our house has become completely unsuitable and you are starting to feel really uncomfortable and quite miserable.

We have a two bedroom house and we have two boys, one who is now 20 and one who is 13.

They need their own room, but they still have to share. I also have huge amounts of medical supplies that need to be kept sterile as I am fed by a machine every day – and I have to keep everything in my room, which is far from ideal.

My mortgage balance is exactly the same as it was when we started. I wouldn’t even think about how much I’ve paid in the past 15 years, and we still haven’t cut a dime.

The property has around £ 45,000 in equity, our credit records are absolutely perfect and there have been no missed payments for 10 years, but we still cannot get another mortgage.

There’s eight or nine years of mortgage left, and when that ends we’ll likely have to sell the property and move to a rented property. I don’t want to go down the property ladder, but it’s almost to the point where it’s going to be forced that way.

The SVR cap for us personally would save us around £ 200 to £ 250 per month as it would bring the rate down to around 2.1% – but there are other people in the UKMPAG group for whom this will reduce their payments around £ 800 per month. It’s huge – it’s income.

Euan Sinclair, 59, from Northamptonshire: highest rate paid 9%

Euan’s mortgage is with Kensington, which unlike others mentioned in this article is an active lender and is able to offer new loans to some clients.

Euan Sinclair says he is unable to remortgage despite above-average credit rating

Euan Sinclair says he is unable to remortgage despite above-average credit rating

My partner and I bought and moved into a freestanding three bedroom cottage in a village in Northamptonshire in 2000. We took out a mortgage with Nationwide and did the major renovation and renovation work.

Unfortunately, I was made redundant in 2001 from a high paying job, so I became a self-employed driver. Everything was fine until a traffic accident in 2005 resulted in a broken ankle and a period of several months without work.

Although I was not responsible for the accident, I received minimal compensation for the loss of almost £ 10,000 in income. This means that we have fallen behind with our mortgage and credit card payments across the country and were very close to recovery in early 2006.

We contacted a broker and received a “certified self interest only” mortgage offer from Money Partners.

Right before we had to sign the papers, we were informed that the independent appraisal had not reached the expected value of the loan. We were told we had to pay a higher interest rate, but as this has been ‘discounted’ for 5 years, this was not a problem.

We asked to see an appraisal, but it only arrived after we were done on the mortgage, as time constraints on repossession forced our hand.

Immediately after completion, the mortgage was transferred to Kensington.

We didn’t think the property had been properly valued, but neither company would take responsibility for it.

We figured it would only be for a few years, and once we fixed our less than perfect credit history, we would remortgage a repayment mortgage with a traditional lender.

We all know what happened next – the financial crash over which neither of us had any control. Over 14 years later, we are currently paying almost £ 900 per month at a 5 percent SVR and have no late payments and no arrears.

Our property has a current value of almost double our current loan, and I also have a significantly above average credit rating – but we have an extremely low affordability rating which prevents us from re-mortgage at a more reasonable rate. .

This could reduce our monthly payment to £ 350 and allow us to pay off part of our loan without having to sell our house and move out at some point.

For us, a cap on the SVR would have a similar effect to switching to a traditional lender on a commercial rate, which for us would be around 2 percent.

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