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Halifax will free some mortgage prisoners by offering them a new deal

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Written by: Shekina Tuahene
13/10/2020
The lender is going to accept mortgage prisoner remortgages where the borrower has at least 25% equity in their home
Halifax will free some mortgage prisoners by offering them a new deal

Halifax will accept remortgage applications from mortgage prisoners under the Financial Conduct Authority’s (FCA) new affordability assessment to help them switch onto better rates.

The bank will only accept applications up to 75 per cent of the property’s value, meaning the borrower needs at least 25 per cent equity.

To qualify for a Halifax remortgage, borrowers must have a letter from an inactive lender confirming they are a mortgage prisoner and must be on their main residence with no any extra borrowing.

They will only be able to borrow the maximum amount of the first charge mortgage and the new monthly repayments must be no higher than five per cent more of what they already pay.

Halifax will consider interest-only mortgages if there is a repayment plan in place but borrowers in financial difficulty will not be accepted.

Those who have shared ownership or equity mortgages will not be eligible.

Any borrowers added to a remortgage must meet Halifax’s standard criteria as they will not be considered a mortgage prisoner.

Last year, the FCA made changes to affordability assessments for mortgage prisoners who are stuck on high rates with inactive or unregulated lenders.

Lenders can apply these rules to specific borrowers and it is open for those who are up to date with payments, do not want to borrow more and want to stay in the same property.

Mortgage administrators are required to contact mortgage prisoners by 1 December to inform them that they are able to switch and direct them to products which have the modified affordability assessment in place.

A spokesperson for Halifax said: “We are keen to support homeowners classed as ‘mortgage prisoners’ and as part of the FCA scheme, we will be accepting applications from borrowers with other lenders. We encourage borrowers to review options available across the market to ensure they’ve got the right product for their circumstances.”

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