If you’re thinking about moving house or have recently moved, you’ve probably heard of the Mortgage Market Review, as the affordability checks that providers undertake to ensure that you aren’t taking on too much debt, just got tougher. However, if you’ve already got a mortgage and have been sitting pretty, keeping up with your repayments, you may be none the wiser.
Unfortunately, some existing home-owners are getting stuck on their providers’ higher Standard Variable Rate when their existing deal comes to an end. This is because they don’t meet the new affordability checks and if their provider uses a computer-based system, some home-owners are being rejected automatically. These so called ‘mortgage prisoners’ are one of a number of ‘mortgage misfits’ groups who are struggling to secure a mortgage from mainstream providers. See infographic below.
If you’re one of these mortgage prisoners but you’ve kept up with repayments, your circumstances haven’t changed and you don’t want to increase your borrowing, then all is not lost. There are terms in place, known as ‘transitional arrangements,’ which allow providers to review your individual case. Some providers, including Ipswich Building Society, will even consider your application if you’ve already been turned down by your existing provider.
Paul Winter, Chief Executive, Ipswich Building Society, says: “It seems wrong that some lenders are turning their backs on homeowners who have consistently made their repayments but suddenly find themselves classed as a ‘bad customer’. If you find yourself in this situation, you should look around for a provider who takes a human-centred approach to reviewing new applications, and accepts applications under transitional arrangements, as you are more likely to be accepted.”
YOUR HOME MAY BE RE-POSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS
Ipswich Building Society has been championing the cause of ‘mortgage misfits’ and recently announced a new programme of mortgage lending for borrowers who have been let down by other lenders as a result of the stricter affordability rules imposed in April 2014.