Lenders to switch mortgage prisoners to cheaper deals

Lenders have now come to an agreement to help borrowers who are presently stuck paying repayments at Standard Variable Rates (SVR) because they do not pass stricter affordability rules for cheaper deals, which came into being after they first had a mortgage.

Borrowers who are so-called mortgage prisoners will be able to switch to better offers from their existing lender. This has been established under the new industry common standards agreement, which have been adopted by 59 providers representing more than 90% of the residential mortgage market in the UK.

Qualifying borrowers will be contacted by their lenders by the end of 2018, giving them the opportunity to move to a new product, should they wish.

The standards apply to first-charge mortgage customers of a current and active lender on a reversion rate on a like-for-like mortgage.

An important requirement is that borrowers must also be up to date on repayments to qualify, have a minimum remaining term of two years and have a minimum outstanding loan amount of £10,000.

It is also worthwhile to check with a qualified adviser that the current lender offering is likely to be of benefit compared to any other mortgage products available that may be considered appropriate as a remortgage option.

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