Ishaan Malhi, founder of online mortgage broker Trussle, describes the situation as “dire”. “Having spoken to mortgage prisoners over the last few years, it’s no exaggeration to say that it can end up costing them hundreds of thousands of pounds in excess interest through no fault of their own,” he says.
In the years leading up to the 2008 financial crisis, lenders were dishing out large mortgages and asking for tiny deposits in return. Property values were rapidly outpacing wage growth, and buyers were being allowed to borrow eight times their annual salary. For many homeowners, the problems started after the crash when the regulators forced the banks to toughen up their lending criteria. This meant that people with large mortgages couldn’t negotiate a better deal – either because they no longer passed the affordability checks, or because their credit rating had been damaged. As a result, tens of thousands of people are now “mortgage prisoners” – trapped on their lender’s high-interest standard variable rate (SVR), paying hundreds more each month than the average fixed-rate deal.
http://www.cityam.com/269516/brexit-could-help-mortgage-prisoners-break-free
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