Nearly 50,000 people in the UK are believed to be mortgage prisoners (Image: GETTY)
A warning has been issued to so-called mortgage prisoners. The term refers to people trapped in a devastating financial situation when they’re stuck in a .
They could be facing crippling on their home loans that are making bills unfeasible while also being unable to switch to a new lender or product.
The vast majority of prisoners unintentionally fell victim to this after the 2008 crash when their lenders became ‘inactive’, meaning they can no longer offer new products, while the majority of active lenders put in place a number of additional criteria and stringent requirements.
Essentially, when the housing market crashed they became trapped in the they were paying at the time, particularly concerning those that were on high interest mortgages or had plans to move away from their lender.
The says there are about 47,000 prisoners in the UK.
However, that’s not to say there aren’t any options.
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It’s advisable to check with your current lender first to see if you are a prisoner and what your options could be.
It may also be worthwhile checking with other lenders, particularly their eligibility requirements, in case you’re able to find a deal you can move to that would cut your bill.
If you are truly stuck as a prisoner, there isn’t currently help available from banking institutions or the government but this could soon change.
In March 2023, and Martin Lewis commissioned and funded LSE to publish a landmark report setting out costed solutions for prisoners.
The Economic Secretary to the Treasury has promised to look into these latest proposals.
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MSE also advised prisoners to head online, with countless free groups on social media available to support the physical and mental health issues that come along with being a prisoner.
Non-profit debt counselling can also help rearrange your finances in a way that better works for you, such as the National Debtline, Citizen’s Advice and StepChange.
Some people may not even be aware they’re prisoners.
The two key factors are if you purchased your home, or remortgaged it, before 2014 when lender regulations changed, or if you have previously been told you can’t switch to a cheaper deal.
Other signs include being stuck on a standard variable rate, some as high as 9%, that could mean you’re struggling to meet monthly payments or if you’re risking repossession or negative equity.
Negative equity occurs when the value of your home is less than the outstanding balance on your .