How one mortgage prisoner may only survive for another month

Anne-Marie, who is currently on an interest-only mortgage, explained interest rates on her mortgage have exploded over the past year, rising from 4.5 per cent to 8.94 per cent.

As a result of this increase, her monthly mortgage costs on her house, which is worth around £750,000, have increased from £950 to £1,998 in just a year.

This has had a huge impact on Anne-Marie and her husband who have a family of six children and a mother who is suffering with dementia.

If I was just married I would have just sold and moved on but we’re doing this for our kids

The impact of this “extortionate” rise in her mortgage payments was made even worse for Anne-Marie as her son has received treatment for leukemia for the past four years, which has involved relocating to four different hospitals.

As a result of this constant need to relocate, Anne-Marie and her husband are unable to have any permanent employment, requiring flexibility to ensure their son gets the treatment he needs. 

To continue to pay the bills, they had to rely on the savings they had amassed over the years but warned this will not last much longer.

“We’ve just used any savings that we have and we’re now coming to the end of the savings that we’ve got. 

“Friends and family have been really good and tried to do charity raising events to try and help us so we can keep our home while my son is having treatment, but it's really hard.”

Background

Providing some background on her situation, Ann-Marie told FT Adviser her current home had been owned by her parents but, after her father passed away when she was young, her mum struggled to keep up with payments.

To help with this, Anne-Marie and her partner bought the house in 2000, worth £425,000 after it had gone through a series of renovations.

In 2006, Anne-Marie transferred her mortgage to Northern Rock, and cited the “amazing rates” as a motivating factor but said she wishes she had never done so.

Soon after the transfer, the market experienced the crash of 2008 and, as a result, the mortgage eligibility criteria changed and “we’ve pretty much been stuck ever since”.

“We have to afford extortionate rates these non lenders charge without any affordability checks, but we can't move our mortgage due to affordability checks, yet we are not in arrears,” she said. “It doesn't make any sense at all”.

After Northern Rock failed, Anne-Marie's mortgage was sold off to several different buyers before ultimately being bought by Heliodor, who currently owns it.

A spokesperson for Heliodor said: “We work hard to support customers who are experiencing financial and other difficulties and we’ve actively engaged with Ms Gillespie about her options during this very difficult time for her family. 

“We recognise that many individuals are struggling with the current cost of living and would encourage anyone experiencing difficulties to get in touch as early as possible to discuss what support is available.”

The spokesperson added that Heliodor frequently liaises with representatives of mortgage prisoners, including their representatives, to help them better understand their options and communicate these as clearly as possible.

They added it has “processes in place” to identify and work with vulnerable customers and are “in regular contact” with the government and the regulator to ensure it is treating customers fairly whilst offering tailored support to those in need.

“We’re also part of ongoing discussions within the industry, including helping to take a lead role in a project to agree an improved customer contact journey for mortgage prisoners,” they added.

Post transfer

Anne-Marie said following the crash, she didn’t remortgage as financial advisers suggested that she “sit tight” as “another mortgage company will come in and buy you out”.

However, 10 years after the crash, she realised how bad the situation had become as she was unable to move.

“Now over the last four years with my son starting cancer treatment, because we aren’t in permanent work and only work when we can, we are disregarded as not being able to move to another mortgage company because of affordability checks,” she explained.

This situation had a huge effect on Anne-Marie as she now has to find an extra £1,000 a month to cover the increased mortgage costs while, at the same time, dealing with increased cost-of-living bills.

She added the effect on her mental health has been “horrendous”, and described having “sleepless nights” and not being able to eat due to the worry of losing the roof over her and her children’s head.

“If I was just married I would have just sold and moved on but we’re doing this for our kids”, she added.

Anne-Marie criticised the government for her situation, saying: “The government sold over 200,000 of us to American finance companies to pay the debts they had incurred making over £2.4bn profit for themselves.

“They knew from the start these companies didn't have lending licenses, the government knew this but threw innocent hardworking people into poverty, suicide and mental health illnesses and their children and families.”

In response, a spokesperson for HM Treasury spokesperson, said: “The government understands the difficulties faced by borrowers who were not able to switch to a new mortgage deal.

“We have updated mortgage lending rules, removing the barrier that prevented some mortgage prisoners from being able to switch, and introduced significant financial and legal protections for those most in difficulty.

“We continue to work with the Financial Conduct Authority and the sector on this issue and will carefully consider practical and proportionate solutions put forward.”

Support

Anne-Marie also criticised the support that was available to her from Heliodor.

“There’s no support at all because they’re a non-lender," she said. “They can’t extend our years, they can’t lower our payments, and we can’t change to another mortgage company."

In response, Heliodor’s spokesperson said: “As a ‘closed book’ or ‘inactive’ lender, we don’t offer new mortgage products, but we don’t impose any unnecessary restrictions on those who wish to switch to another provider.

“We will automatically waive any early repayment charges to customers with fixed-term mortgages who chose to move."

The spokesperson also stated that Heliodor has also offered a number of options to Anne-Marie including converting to capital and interest repayments, a term extension, as well as short term concessions. 

“We’ve also provided illustrations of the potential financial impact of each and recommended that the couple seek professional financial and debt advice before making any decision.

“We’re still awaiting the outcome of these discussions, however, if Ms Gillespie continues to feel that the mortgage is unaffordable, we’re happy to discuss what immediate support they might need whilst we explore their options further.”

Government support

Anne-Marie also said there was a lack of support currently coming from the government, explaining that, while universal benefit was helpful, it did not go far enough.

“If your mortgage payment is £2,000 a month you’re looking at £1,500 a month extra in terms of electricity, oil, water, food expenses, and normal day-to-day living costs as well.

“There’s nothing out there that would cover all those payments.”

However, she did identify one area where she felt supported, the Mortgage Prisoner Facebook page.

“I thought I was alone until I found them and realised how many are in this awful situation”, she said.

However, while her situation currently looks bleak, Anne-Marie pointed to recent developments which indicated there was still hope on the horizon, mentioning specifically the current interest in the Post Office scandal.

“We are hoping, since the Post Office scandal is being highlighted on the TV, that it will open doors for what we’ve been fighting for for two decades now.

“If we can make people aware, the government and everyone else, then maybe we can be heard eventually if we keep shouting.”

tom.dunstan@ft.com

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