Woman can’t save for retirement as she’s living ‘hand to mouth’ paying mortgage

BBC Moneybox talks to ‘mortgage prisoner’ Mandy

Mortgage payments are set to rise which will put the squeeze on the thousands of people who are trapped paying unaffordable mortgages.

These people are called ‘mortgage prisoners’ – many bought their homes in the late 2000s with lenders who went bust in the financial crisis.

The Government took over those banks and sold the mortgages to inactive lenders meaning their customers can’t switch to a better deal with them and many can’t remortgage to a different provider for a much cheaper rate as the rules were tightened and they don’t qualify.

‌This means they are left paying hundreds of pounds more than if they were able to switch to a better deal.

On BBC Money Box, Mandy spoke to the team about how she hasn’t been able to save for retirement as she can barely keep up with her mortgage payments

She explained that every time the mortgage rates have increased over the last year or so, her mortgage has increased in line with that.

Currently she is 8.14 percent on her mortgage repayment, but she is expecting that it will rise with the 0.25 percent inline with the most recent Bank of England base rate increase. This will push her mortgage repayment rate to 8.39 percent from June 1.

This 0.25 percent equates to a “huge” £30 a month increase each month.

She said: “It’s a lot of money to find with the cost of living increases. It’s really difficult.

“It’s pretty much a hand to mouth system for us and we’ve never able to save for retirement.

“We’re both getting older. I’m 57 and my husband is 61 and we realised now we’re going to have to be working until well after retirement age because of the shortfall.”

“It’s stressful. I feel let down by the whole thing as the Government gave us non leading un active third parties.

“We’ve been trapped all this time we just have to try and hold everything together and get by.”

Martin Lewis has called for urgent action to help 200,000 mortgage prisoners who are trapped paying these high rates.

He explained on the podcast that the Government “bailed out” the banks for bad lending, but didn’t help out the victims.

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He said it has led to “huge mental and physical health consequences and it’s time to end this situation and give these people the mortgage freedom they deserve.‌”

The founder of Money Saving Expert highlighted the fact that many mortgage prisoners have been trapped on high rates since the 2008 financial crisis.

Mr Lewis said: “It’s really important people understand the huge life detriment that mortgage prisoners have suffered.

“It’s an intolerable situation that these forgotten victims of the financial crash have been living through year after year.

“Again, I am incredibly grateful that the economic secretary has said he will look into the policy solutions put forward.

“However, time is of the essence – the impact on people’s well-being, mental health, and in some cases whether they’re still around or not, is continuing to get worse. The Government must intervene, and it needs to be sooner rather than later.”

Episodes of Money Box are available on BBC Sounds.

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