‘I feel completely trapped in my mortgage’ Homeowner, 55, on struggle as rate rise nears

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New research by Citizens Advice, published last month, found that 42 percent of people whose fixed term mortgages came to an end since the start of the first lockdown on March 23, 2020, took no action to switch. Worryingly, this amounts to 2.9 million people.

The charity is warning that the burden is falling on the consumer to get the best deal.

It means those who can’t or won’t switch are at risk of paying over the odds for their mortgage.

It’s a very real concern for Gavin, 55, from Norfolk.

He sought help from Citizens Advice after losing his job and having to claim Universal Credit.

Gavin’s fixed-term mortgage is due to end in July, and he had hoped to seek another deal rather than roll onto his lender’s Standard Variable Rate (SVR).

However, when he contacted his mortgage provider, they said due to his circumstances, he might not be able to switch and would be moved onto the SVR.

“Since being made redundant and claiming Universal Credit, I’ve lost three quarters of my income,” he said.

“For a while, the only thing helping keep my family afloat was the disability allowance we receive that helps us care for our disabled son.

“It’s been incredibly stressful and really affected mine and my wife’s relationship.

“We’re locked into a situation where we cannot move house or re-arrange our mortgage.

“We’ve never been in debt before or missed a mortgage payment in ten years, but now we’re struggling.

“The Standard Variable Rate is likely to be a lot more than what I’m currently paying.

“I feel completely trapped in my mortgage.”

Taking a mortgage holiday is an option Gavin was offered, but he’s conscious the payments will need to be met at a later date.

He explained: “They offered me a mortgage holiday but I know that this would only be kicking the can down the road and I’d still struggle with the payments once this ended.”

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Not switching could leave loyal mortgage customers charged an average extra £1,000 a year in bills, the Financial Conduct Authority (FCA) estimates.

And new research by Citizens Advice also found that disabled people and carers were more likely to see a price increase at the end of their mortgage contracts than the general population.

The research also found that one in five (21 percent) mortgage customers who didn’t switch said the process was too time consuming or difficult.

Meanwhile, many have also been unable to switch due to circumstances outside their control such as mental or physical ill health and additional pressures resulting from the pandemic.

Citizens Advice is calling on the FCA to make interventions in the mortgage market as soon as possible, to prevent struggling mortgage customers from paying the loyalty penalty.

Alistair Cromwell, Acting Chief Executive of Citizens Advice, said: “The pandemic has had a devastating impact on household finances.

“While the FCA acted fast to protect mortgage customers from the more immediate impacts of the pandemic, many will be facing long-term financial difficulty in the months and years to come.

“As the pandemic continues to take its toll on our finances, employment, health and relationships, it’s more important than ever that customers aren’t penalised for not switching.

“As Covid support schemes come to an end, tackling the loyalty penalty is one way that regulators can protect consumers from unfair and unnecessary costs.

“The FCA acted decisively at the start of the pandemic and needs to act decisively now.

“The regulator should introduce concrete and enforceable plans to reduce customer bills now, to finish the job on the loyalty penalty.”

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