New online service – You can now open new savings accounts and view your branch account and mortgage via our online service.

What is a mortgage prisoner?

Written by Ipswich Building Society

25 Oct 2018


Mortgage Advice, Mortgage misfits, Mortgage prisoners, Remortgage

4 min read

The Financial Conduct Authority (FCA) refers to mortgage prisoners as “longstanding borrowers who are currently unable to switch to a better deal” and explains that “most of these customers that appear unable to switch took out mortgages (often interest only) before the financial crisis”.

You may also have heard the term ‘mortgage misfit’, which also relates to this group of people and is also broadly applied to anyone whose circumstances make it difficult for them to obtain a mortgage.

What is being done to help mortgage prisoners?

Earlier this year the FCA issued an interim report into the mortgage market, which identified a number of ways the mortgage market could work better for some people.

The FCA intends to explore options for mortgage prisoners, for example “an industry-wide agreement to approve applications for a new mortgage deal from existing customers whose most recent mortgage was taken out before the financial crisis and who are up-to-date with payments”.

How does someone become a mortgage prisoner?

Mortgage prisoners have become more common since the introduction of new regulation for mortgage lenders in 2014, called the Mortgage Market Review (MMR). This regulation enforced all lenders to apply affordability checks to applicants, taking a close look at incomings and outgoings to check if the mortgage is affordable. Whilst this seems like common sense, and indeed some lenders were already doing this before it became legislation, the need for additional “stress testing” has meant some mortgage customers who secured a loan prior to MMR are now finding their options limited.

In addition to this, many mortgage prisoners will have taken out their loan before the financial crisis during which time it is likely their circumstances will have changed – for example, a new addition to the family meaning a reduction in income and / or an increase in expenditure; a redundancy and / or alternative career; a long term illness; taking out additional credit such as a car loan or funds for home renovations.

What are the options for mortgage prisoners?

Firstly you should speak to your existing lender, if you have not already done so, to explain your situation and see if they are able to provide you with the mortgage deal you require.

If you are looking to remortgage away from your current lender you may have struggled to access deals from large, high-street lenders, who typically use automated processes, meaning that a computer-based system is in place which does not offer the flexibility to consider individual circumstances.

However, there is an alternative! It is worth seeking out lenders who use something called manual underwriting. This is the opposite of an automated system, where real people review applications on a case by case basis, taking personal circumstances into account – which is how we operate at Ipswich Building Society.

Does this mean mortgage prisoners can access new mortgage deals?

Whilst a manual lending approach is likely to be more suitable for those who do not fit into the computer processes employed by some automated lenders, this is by no means guaranteed.

Potential applicants should be prepared to submit details about their income and expenditure, existing credit commitments, property details and more, in order for their application to be carefully assessed.

How do I find out more?

At Ipswich Building Society we offer free, no-obligation mortgage advice through our team of Mortgage Consultants. If you’re looking for a mortgage with us we’ll do our best to help find the right one for you.  So give us a call on 0330 123 0723 or send us a message and we’ll be in touch to help you achieve your dreams.

This article was published under our previous name of Ipswich Building Society. We changed our name in 2021 – find out more.

Found this useful? Why not share

Keep informed and get involved.

Keep Informed

Sign up to our newsletter.

Our blog contains the latest goings-on and updates across the Society and you can follow us on Facebook, Twitter, LinkedIn or Instagram. Exclusively for our members we offer a monthly email round-up of must have stories and latest news, so sign up today.


    Latest news and information

    Our blog contains the latest goings-on and updates across the Society and for members we offer a monthly roundup of must-have stories and latest news in our Freehold Post email newsletter.

    For announcements, alerts or tips follow us on Facebook, Twitter, LinkedIn or Instagram – we’re (almost) everywhere!

    Your browser is out-of-date.

    Welcome to our new website. This site is not fully supported in Internet Explorer.
    Please download one of the browsers below to continue using this website.

    • Google Chrome
    • Microsoft Edge