Martin Lewis, known as the Money Saving Expert, has come back to ITV to share his financial expertise. He often assists members of the public with tough questions which relate to their everyday lives. In so doing, he has helped people to save money, take advantage of the latest deals, and live more efficiently.
Amid the COVID-19 crisis, Martin has also offered advice to mortgage borrowers – as this is a substantial element of a person’s finances.
On his self-titled Money Show, Martin turned his attention to mortgage prisoners – a group of people so-called as they cannot leave their current mortgage due to a change in circumstances.
This can often mean people are unable to switch to a better or cheaper deal, and could find themselves paying the lender’s Standard Variable Rate (SVR) which can often be more expensive than a fixed deal.
However, Martin has provided a useful update to this group, and it is good news which could help people free themselves from their payment trap.
“What happens is when you remortgage, they don’t test to say ‘okay you’re on a six percent mortgage, you’re getting a three percent mortgage, of course you can afford it’, they look at it in isolation which means may people are told they can’t get a cheaper mortgage.”
Martin explained that after a campaign, the Financial Conduct Authority (FCA) decided to change the rules.
This meant lenders would not have to follow the aforementioned outline, and thus could provide more assistance to those looking to remortgage.
West Bromwich Building Society, he said, is therefore the first main lender to look at mortgage prisoners in a different way.
He continued: “If you’re with an inactive lender, up to date on your payments, borrowing less than 75 percent of your home’s value – this will be suitable for you.”
However, the Money Saving Expert did issue an important warning for people to consider.
He concluded: “It won’t work for everyone, but I really hope this is a totem of change, the winds of change are coming for mortgage prisoners.
“We bailed the banks out of the financial crisis, but we haven’t bailed out the victims of the banks!”
In July, the FCA published a statement on mortgage prisoners, saying it recognised the difficulty they were facing.
It laid out a consultation paper, setting out details on its proposals to tackle “potential harms” which may affect borrowers.
While mortgage payment holidays are due to end in October, borrowers can expect more help if they are still struggling.
The FCA has urged lenders to offer tailored support to individuals who still have challenging financial circumstances after the October deadline.
Martin Lewis is the Founder and Chair of MoneySavingExpert.com. To join the 13 million people who get his free Money Tips weekly email, go to www.moneysavingexpert.com/latesttip