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Chancellor commits to looking for 'workable solutions' to help mortgage prisoners - and praises MSE's campaign

Chancellor commits to looking for 'workable solutions' to help mortgage prisoners - and praises MSE's campaign

The Chancellor Rishi Sunak has told MoneySavingExpert.com founder Martin Lewis that the Government will keep looking for solutions to help mortgage prisoners, after Martin tackled him on the issue.

The Chancellor was speaking to Martin on Thursday in an exclusive interview on ITV's The Martin Lewis Money Show. You can watch the show now on the ITV Hub - to skip straight to the bit on mortgage prisoners, start watching from 20.15 - and you can also see our round-up of all the topics covered.

What the Chancellor agreed to do to help mortgage prisoners

So-called 'mortgage prisoners' are homeowners who are unable to remortgage to a cheaper deal with another lender because they don't meet strict borrowing criteria, even though they'd often be paying less if they switched. Martin and MoneySavingExpert.com have campaigned for years for more help for those who are stuck, and last November a landmark report published by the London School of Economics (LSE) and funded by Martin set out practical policy solutions.

Martin challenged the Chancellor on what the Government can do to help, saying: "If you're willing to give a guarantee that helps first-time buyers and others have a 5% deposit [the scheme announced in the Budget this week], will you do the same for the over 200,000 who are mortgage prisoners since the 2007 financial crash?

"They're in closed book mortgages that have been sold on by the Government, paying more rates than anyone else. Those people are desperate - some have taken their own lives, many have looked at taking their own lives. Could a similar scheme, or something similar, not be put in place?"

The Chancellor replied: "You're absolutely right to highlight this issue and thanks for everything you're doing. I know your study with the LSE has been really informative in helping us think through. And I think that's where the 250,000 figure comes from. I think the study also says that about half of those are able to switch, but you're right we still need to make sure that we have workable solutions for everybody and I know we're working with the LSE and others."

Martin then pushed for a more specific response, asking: "Something similar to this for mortgage prisoners would work?"

The Chancellor replied: "As you know, there are lots of complicated reasons and all these people are slightly different, but we are finding ways to get people to switch, but you're right that we should keep working on it, and I can commit to you that, that's what we are doing."

Mortgage prisoner? Here's what you can try now

Whether you can get help now depends on what type of mortgage prisoner you are, and sadly for most there's currently no help available. For full info on the problems facing mortgage prisoners, what MSE has done on the issue and possible solutions, see our Only the Government can release the 250,000 mortgage prisoners it's failed MSE News story.

Overall there are three options available:

  • Switching to a new deal with a new lender via a modified affordability assessment. This is technically open to all mortgage prisoners but in reality is most likely to help those with 'inactive lenders' (ie, those not currently offering new mortgages). Here you apply for a new deal with a new lender that'll use a modified affordability assessment.

    To get an indication of whether or not you're likely to pass a modified assessment, you can try out the Money and Pensions Service mortgage prisoner eligibility tool

    Beyond this, it's worth speaking to a broker who specialises in helping mortgage prisoners, who'll look at your situation and give realistic advice on how likely a lender might be to use the modified affordability assessment for you. As long as you don't pay a fee upfront, you have little to lose – just a few minutes of your time. 

  • Switching to a new mortgage with your current lender. This is where you switch to another cheaper deal but take on no additional borrowing and you aren't looking to move house – called a 'product transfer'. 

    It's only available if your mortgage currently is with an 'active lender' – ie, one offering new mortgages. The other caveat is that it has to be a like-for-like mortgage, ie, no extra borrowing, a two-year minimum term and a minimum outstanding amount of £10,000. 

    If you're unsure where to start, speak to a broker who will advise you on your individual circumstances. Read our Cheap Mortgage Finding guide for help on how to find a broker.

  • A product transfer with a different lender in the same financial group. This is where you switch to another deal with a different lender that is part of the same financial group as your current provider. 

    Frustratingly, there is no simple way for you to check if your lender is part of a wider group, though again a mortgage broker may be able to help here.

For more on the work we've done on mortgage prisoners and possible policy solutions, see the MSE News write-up of the LSE report

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