Remortgage hope for mortgage prisoners as Halifax adjusts acceptance criteria

by Aaron Strutt

Oct 08 2020

Halifax for Intermediaries has started accepting remortgage applications from mortgage prisoners. 
 
The Financial Conduct Authority (FCA) classes customers as mortgage prisoners if they took out a mortgage with a lender no longer accepting new applications or product transfers for parts of their mortgage book. The change led to borrowers being unable to remortgage to a cheaper new deal with another lender, as a result of policy and criteria changes across the market.

Following years of campaigning by the press and homeowners stuck on expensive, standard variable rates, the rules from the FCA will now allow lenders more flexibility to consider remortgage applications.
 
Customers who are classed as mortgage prisoners will receive a letter from their existing lender referring them to the Money Advice Service website, which has further information and a basic eligibility tool. 
 
Aaron Strutt, product director at Trinity Financial, says: "Even though the lenders are starting to offer more mortgage prisoner deals many homeowners will still struggle to qualify if they are not deemed to be an acceptable risk to the banks or building societies. Santander for Intermediaries has generous terms for remortgaging without capital raising as the maximum income multiple is 5.50x income."

To apply for affordability discretion under Halifax's mortgage prisoner scheme: 

• The remortgage must be for the customer’s main residence with no additional borrowing excluding setup or discharge fees. The remortgage cannot include any additional borrowing to repay any other debts secured on the property by way of notice/equitable charge/restrictions. The maximum loan is the amount required to repay the existing first charge mortgage balance only.
• Applicants will need to have at least 25% equity in their property. 
• Interest-only lending is acceptable subject to verification of acceptable repayment plans for the whole amount of interest only per our normal criteria.
• The customer’s new monthly payment must be no more than five per cent higher than the current monthly payment. 
• The mortgage cannot be on a Shared Equity or Shared Ownership scheme.
• The customer must not be in "Financial Difficulty".
• If a party is to be added or removed as part of the remortgage process (transfer of equity) the application cannot be considered under the mortgage prisoner scheme and must be submitted as a standard remortgage and meet normal criteria. 

Call Trinity Financial on 020 7016 0790 for help to remortgage or book a consultation