Quilter is encouraging those with a residential mortgage to speak up if they believe they are locked into an overly priced product.
Quilter is encouraging those with a residential mortgage to speak up if they believe they are locked into an overly priced product.
The financial services company outlines that many mortgage prisoners will not know they are trapped.
Quilter noted that if a borrower took out a mortgage before 2014, and cannot switch to a more affordable deal, even after being up to date with payment, they could potentially be classed as a mortgage prisoner.
Earlier today, 11 November, the London School of Economics published a report, which calls for government action to help unlock an estimated 250,000 mortgage prisoners.
The report, which was commissioned by Martin Lewis, outlines eight potential solutions to resolving the issue of mortgage prisoners.
Gemma Harle, managing director of Quilter Financial Planning, said: “In October last year, the FCA made changes to allow lenders to apply a so-called ‘modified affordability assessment’ when deciding whether a mortgage customer can switch to a cheaper deal.
“The FCA expects lenders to write to all those who may be eligible to let them know that they may be able to switch their mortgage before the 15 January 2021.
“Even if you have deferred a mortgage repayment through the COVID-19 mortgage holiday you may still be eligible to switch, as long as you meet the other eligibility criteria.
“The catch is that although lenders do have the option of applying the modified affordability assessment, they do not have an obligation to do so, and some lenders may choose not to given the uncertain economic environment.
“There will also be many that still will not be eligible to take advantage of the rule change, so further government attention is necessary to find an appropriate solution to the issue.”
