Lenders are going to be able to make their own decisions on how to assist homeowners that have become prisoners of their mortgages.  According to the Financial Services Authority (FSA) the definition of mortgage prisoners will include homeowners that are in negative equity and have credit history problems.  They can also give consideration to those that cannot meet loan to value levels or have concluded a mortgage that is interest-only.

These types of homeowners have been unable to take advantage of the low interest rates on remortgages being currently offered by lenders.  Now lenders have been given the choice to make individual decisions on how to assist the homeowners stuck in an old mortgage that when it ends will leave them converted and stuck on the lender’s standard variable rate.  They can give the homeowners an escape through a new remortgage as long as it does not include additional borrowing and the same or lower repayment amounts.

FSA mortgage policy manager Lynda Blackwell remarked, “The market said to us we had made the transitional arrangements so restrictive that it was not going to help consumers because there were so many conditions. It asked us to think about allowing it to do this on an exceptions basis. That is why we have relaxed it. The whole point is to make sure more borrowers can benefit from the arrangements.”

For homeowners that have been unable to get a remortgage it is suggested that they meet with their lender to discuss options available to them and how to change their current situation into a more positive one for their financial future.