‘Mortgage prisoner’ fights to stay put
THE ONLY thing single woman Karen Osner wants is to be able to stay in the house she has lived in since childhood.
“To have to leave would break my heart,” says Karen who has no immediate family but who is facing a financial time bomb that could end in her losing what she loves the most.
Her problem centres on the £160,000 interest-only home loan she took out 12 years ago.
She is one of tens of thousands who consider themselves “mortgage prisoners”, affected by the stricter lending criteria brought in following the last financial crash to cut defaults, leaving some trapped in expensive deals unable to switch.
Others, like Karen, have been prevented from remortgaging.
Despite having an exemplary payment record, her self-employed and earnings assessed on income after tax, compounded by her age, 65, means she falls short of those stricter affordability rules now in place.
Karen’s loan will reach its term in July. Her desire is to carry on as before with an extension, eventually using the equity or value in the property, currently worth 50 per cent more than what she owes, to pay off the loan when she does move or passes away.
“Since taking out the loan, one of those self- certified ones that are no longer available, my circumstances have changed,” she explains.
“I had expected to be receiving a state pension by now, but I am one of the many women who lost thousands of pounds when they raised the pension age. I was also carer for my mum who suffered with Alzheimer’s disease.
“Now assessment is on my income after tax – and so is much less. It’s a perfect storm.”
It was only after asking her lender, the Bank of Scotland, part of Lloyds Banking Group, about extending for another five years that she realised there was a problem.
“With an extension, the terms for my obtaining equity release would improve and the value of my home is likely to increase so I would be in a much better position,” she explains. However, the offer Karen has received is for a six-year mortstatus gage on a part-repayment basis at a cost of £1,300 a month, double what she currently pays.
That prompted her Crusader for our help.
“I just can’t afford that,” says Karen, “but with another solution we would all win. I could keep my home until I had more options and they would keep their customer.”
Lloyds is now reviewing the matter. The regulator has altered rules to help “mortgage prisoners” move to a cheaper provider.
“However lenders are not compelled to use this option,” advises David Hollingworth of broker L&C Mortgages.
“Although smaller lenders such as Beverley and Ipswich building societies have developed some more flexible options, it has yet to pick up momentum.” to ask
‘To have to leave my house would break my heart’