Mortgage prisoners: Will a law change finally offer an escape?

This is Money spoke to three mortgage prisoners about the impact it has had on their lives. Some of them are on temporary lower rates, thanks to Covid-19 – although it is unclear when this temporary respite ends. 

Claire Johnson, 57, from Sheffield: Highest interest rate paid 5.4% 

Claire Johnson, pictured with her nephew, says she was apprehensive about taking a 100 per cent mortgage but was reassured by a financial adviser 

I took this house on eighteen years ago with a Northern Rock Together mortgage. 

Previously I owned a flat, but when I got married and had my daughter it wasn’t ideal for a little one.

The independent adviser who came to see me said: ‘This is the one you want, the Together mortgage.’ 

I was a bit apprehensive – it was basically a 100 per cent mortgage. I’d always worked, just as a legal secretary so I didn’t make a fortune, but I managed. But the adviser said I could afford it. 

My husband was helping me at first, but later that year he left. 

I remained in the house, struggled, and then when Northern Rock went under I got a letter through the door saying my mortgage was now with NRAM. I didn’t know who they were.

I’ve really, really struggled. It’s the rates: I am currently on 5.4 per cent. When you think about what other people are paying, and what I’ve paid all that time… how I’ve not gone under, I don’t know.  

I got in debt: I was never, ever in debt before that. I always had a good credit rating. That’s something that has really upset me. I’m not in negative equity now, but I was for a long time. 

You’ve just been planted there, you’re stuck and you can’t move, it’s very difficult. It’s like having a brick tied around your neck and you might as well just jump in the river.

I’ve never been on holiday, and I haven’t decorated since I first moved in because I haven’t been able to afford to. The only room I have decorated was my daughter’s room, because it was bubblegum pink with fairies and she was a teenager by that point.

It’s impacted so much on my daughter, who is 21 now. The reason I didn’t want to lose this house was that I didn’t want to let her down. 

You go without everything – at school it was embarrassing because I didn’t have the money for trips and things. 

Other kids might go to the cinema on the weekend, but we went to the library as her Friday treat. Little things like that that make you feel like second-class citizens – just because I’m in this situation that I shouldn’t have been in. 

My daughter is now at university where she is in her final year and in in line to get a first. 

I’m really proud of her – but I’ve not felt like a good mum, as I couldn’t send her any money. If it wasn’t for my mortgage, I would have been able to do that. I’ve had quite a lot of mental health problems due to it which I still suffer from. 

It would be ideal if we could get the rate down or be able to switch. If we can afford what we’re paying now, and we move to a new provider at a better rate, of course we can afford that.   

Rachel Neale, 42, from Hinckley in Leicestershire: Highest rate paid 5.75%

 My husband and I took out our interest-only Together mortgage with Northern Rock in 2006. 

We were told by our independent advisor that this was one of the best products on the market, and that we could do two years on interest-only and then move over to a repayment mortgage. 

That suited us because we were just about to get married, it was our first house and it freed up a bit of money. 

In late 2008 and we tried to switch to a repayment mortgage – but the crash had happened and everything had changed. They told us that we no longer passed affordability and we had to stay on interest-only. 

As the years went on, I became seriously ill with Crohn’s disease and at one point was in hospital for about a year. That affected my husband’s business, and we fell into some arrears, but we completely caught up.

 Our home has become totally unsuitable. It starts to make you really uncomfortable and quite miserable

In 2016, our mortgage was sold on from NRAM to Landmark and we asked again if we could move on to repayment. 

They said that because of our interest rate, which was about 5.75 per cent, that we simply wouldn’t be able to afford it. 

They also said that because they didn’t have a lending license, they wouldn’t be able to offer us any other products. We were really completely trapped. 

Our home has become completely unsuitable, and it starts to make you feel really uncomfortable and quite miserable. 

We have a two-bedroom home, and we have two boys, one that is now 20 and one that is 13. 

They need their own rooms, but they have to still share. I also have huge amounts of medical equipment which needs to be kept sterile because I am fed by a machine every day – and I have to keep it all in my bedroom which is far from ideal. 

My mortgage balance is exactly the same as what it was when we started. I wouldn’t even like to think how much I’ve paid over the past 15 years, and we still haven’t chipped a penny off it.  

The property has about £45,000 of equity in it, our credit files are absolutely fine and there has been no missed payments for 10 years, but we still can’t get another mortgage.

There are eight or nine years left on the mortgage, and when that comes to an end we will probably have to sell the property and move out into a rented property. I don’t want to step off the property ladder, but it’s almost getting to the point where it is going to be forced that way. 

The SVR cap for us personally would save us about £200 to £250 a month as it would take the rate down to about 2.1 per cent – but there are other people on the UKMPAG group for whom that is going to slash their payments by around £800 per month. That’s huge – that’s an income. 

Euan Sinclair, 59, from Northamptonshire: Highest rate paid 9% 

Euan’s mortgage is with Kensington, which unlike others mentioned in this article is an active lender and is able to offer new loans to some customers.

Euan Sinclair says he is unable to remortgage despite having a higher than average credit rating

Euan Sinclair says he is unable to remortgage despite having a higher than average credit rating

My partner and I bought and moved into a three bedroom detached cottage in a village in Northamptonshire in 2000. We took out a mortgage with Nationwide and proceeded with the substantial renewal and renovation works.

Unfortunately I was made redundant in 2001 from a well-paid job, so I became a self-employed driver. All was going well until a road accident in 2005 resulted in a broken ankle and a period of several months with no work. 

Despite not being at fault for the accident, I received only minimal compensation for the loss of almost £10,000 in earnings. This meant we fell behind with our Nationwide mortgage and credit card payments, and came very close to repossession in early 2006.

We contacted a broker and received an offer of a ‘self certified interest only’ mortgage from Money Partners. 

Just before we were due to sign the papers, we were informed that the independent valuation had fallen short of the expected loan to value. We were told we would need to pay a higher interest rate, but as this was ‘discounted’ for 5 years that wasn’t an issue. 

We asked to see a valuation, but it didn’t arrive until after we had completed on the mortgage as time constraints on the repossession forced our hand. 

Immediately on completion, the mortgage was transferred to Kensington.  

We didn’t believe the property had been valued correctly, but neither company would take responsibility for this. 

We reasoned that it was only going to be for a few years, and that once we had repaired our less than perfect credit history we would remortgage to a repayment mortgage with a mainstream lender. 

We all know what happened next – the financial crash over which none of us had any control. Over 14 years later, we are currently paying almost £900 per month at a 5 per cent SVR and have no missed payments and no arrears. 

Our property has a current value of almost double our current loan, and I also have a significantly higher than average credit rating – but we have an extremely low affordability rating which stops us from remortgaging at a more reasonable rate. 

This could reduce our monthly payment to £350 and allow us to clear some of our loan without at some point having to sell our house and move away. 

For us, a cap on SVR would have a similar effect to moving to a mainstream lender on a commercial rate, which for us would be around 2 per cent.