Mortgage prisoners should be feeling more confident in finding a better deal after onerous and unfair barriers have now been removed.
Earlier this week, the Financial Conduct Authority (FCA) announced that many mortgage customers trapped in their mortgage deals could now access better deals.
The new rules encourage lenders to use a more proportionate affordability assessment for customers trapped in their mortgages but meet the necessary criteria.
Those who remain up to date with their mortgage repayments and are not looking to borrow more money or only looking to cover finance fees should now be able to remortgage their property, releasing them from the shackles of historic mortgages with inactive lenders.
The definition of what constitutes a ‘more affordable mortgage’ has been amended following a recent consultation. The new rules will now permit borrowers to finance intermediary fees and product/arrangement fees through the new mortgage.
Customers of inactive lenders and firms not authorised for mortgage lending will now be contacted and informed of the increased ease of switching lender.
The new rules are to be enforced immediately and the FCA has been working closely with lenders to help them prepare for the changes.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA said:
“Responsible lending is hugely important, and unaffordable borrowing is a cause of significant harm.
“Mortgage prisoners are often stuck on more expensive mortgages. We are removing barriers to switching in our rules and we would like to see firms make changes to their own processes quickly in order that customers can benefit as soon as possible.
“We are also taking steps to help those who have mortgages with inactive lenders or unregulated entities to ensure that they are aware that they may now be able to switch and save money.”
Will these changes help mortgage prisoners access a better deal?
