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Halifax to accept mortgage prisoner remortgages

Paloma Kubiak
Written By:
Paloma Kubiak

Halifax will accept remortgage applications from mortgage prisoners under the Financial Conduct Authority’s (FCA) new affordability assessment to help them switch onto better rates.

The bank will only accept applications up to 75% loan to value (LTV) and via brokers only.

To qualify for a Halifax remortgage, borrowers must have a letter from an inactive lender confirming they are a mortgage prisoner and must not require any extra borrowing. 

They will only be able to borrow the maximum amount of the first charge mortgage and the new monthly repayments must be no higher than 5% more of what they already pay.  

Halifax will consider interest-only mortgages if there is a repayment plan in place but borrowers in financial difficulty will not be accepted. 

Those who have shared ownership or equity mortgages will not be eligible. 

Any borrowers added to a remortgage must meet Halifax’s standard criteria as they will not be considered a mortgage prisoner. 

Last year, the FCA made changes to affordability assessments for mortgage prisoners who are stuck on high rates with inactive or unregulated lenders. 

Lenders can apply these rules to specific borrowers and it is open for those who are up-to-date with payments, do not want to borrow more and want to stay in the same property. 

Mortgage administrators are required to contact mortgage prisoners by 1 December to inform them that they are able to switch and direct them to products which have the modified affordability assessment in place.