'WE'RE MORTGAGE PRISONERS' Family told by Santander they can’t buy a SMALLER house with cheaper mortgage

Anne and Carl Winter want to downsize their home to make their monthly repayments cheaper - but Santander won't let them

10 May 2018 - 11:55

A FAMILY of three have been stopped from down-sizing their home because mortgage lenders Santander won't let them switch to a smaller mortgage.

New parents Anne and Carl Winter - not their real names - from Derbyshire wanted to move to a smaller house in an attempt to reduce their monthly repayments.

But the bank rejected their application even though it would reduce their monthly outgoings by £550, according to the Daily Mail.

Anne and Carl are one of the 150,000 long-standing homeowners who are "prisoners" of poor value mortgage deals.

They now face a £7,747 penalty if they choose to leave their current mortgage deal early and have been told to find another lender.

The couple bought their new build home in 2014 for £160,550, after securing a five-year fixed term mortgage with Santander. They put down £8,450 deposit.

What can you do if you're a mortgage prisoner?

STRUGGLING to keep up with your mortgage repayments? Here are a few things you can do, according to Citizens Advice:

Switch to a cheaper deal - You may be able to get a cheaper deal with another mortgage lender, and it may worth switching if you've not got long left on your current deal. But you should be aware that you may have to pay charges for changing and you'lll still have to pay off any money you owe to the first lender if you’re behind with your payments.

Cutting down your monthly repayments - Ask your lender if they will agree to cut down how much you pay them each month. This is usually only for a limited amount of time but it may get youthrough a rough patch. You may also be able to increase how long you pay off your mortgage, but youre likely to end up paying more interest in the long term.

Sell back some of your shared ownership - You may be able to reduce your mortgage payments by selling back some of your ownership of the property to the landlord. Not all shared ownerships schemes offer flexible tenure so you will need to contact your landlord to check first. You'll also have to show that you've explored all other options first.

But their finances took a dive after Anne had to give up her £17,000 a year job at the council to save on childcare, for their now one-year-old son Danny.

On top of this, the couple had already racked up £20,000 in credit card debt from their wedding in 2016 and a training course for Carl, 24, who is a lorry driver.

Moving to a smaller house would reduce their mortgage to £145,000, saving them around £200 a month.

And because their house has increased in value over the past four years by £25,000, freeing up the equity would mean they could pay off their credit card debt, saving them another £350 a month.

They were told by a Santander adviser that they could move their mortgage for fee for breaking the fixed-term early.

This would be 5 per cent of the £9,000 difference between their old mortgage and the new one - which works out at £450.

The couple pressed ahead and found a three-bed house in Coalville, Leicestershire, and even found a buyer for their Derbyshire home.

But a few weeks later Santander rejected their application because they failed affordability checks introduced in 2014, even though they'd never missed a payment.

The new regulations by the Financial Conduct Authority look at monthly expenditure before deciding whether or not they will lend.

Santander says the adviser who gave the Winters incorrect information will receive further training and has offered £100 compensation.

A spokesman for the bank told the Sun Online that since Anne and Carl first took out their mortgage in 2014, their financial circumstances have changed "significantly".

They said: "In reaching our decision, we have reviewed associated costs with the new property the Winters are looking to buy, and also looked at the future costs of paying back a mortgage.

"However, we would be happy to review this case again to try and support the Winters in finding an affordable solution.

"We will also look to review the early redemption penalty if the Winters successfully move to another mortgage lender, or sell their property."

The financial watchdog has called for more to be done to help people who are trapped in deals with poor rates.

But making things even more complicated, is that many of these so-called mortgage prisoners have an interest-only mortgage.

Last week, the Sun reported on the case of Len and Val Fitzgerald, who are 77 and 76, and how they are now facing a £180,000 bill if they want to continue to live in their home of 17 years.

If you're looking to get a mortgage, we've spoken to the experts to find out what you can do to boost your chances of getting accepted for one.

 

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