Three women share their experiences of getting stuck with a poor mortgage following a relationship breakdown
Mortgage affordability rules are designed to protect homeowners from taking on debts they can’t afford. However, at times they can really hurt the people they are trying to protect.
Existing homeowners who find they fall foul of new, stricter lending criteria may not be able to remortgage to get a cheaper deal, leaving them with higher mortgage payments at a time when they can perhaps least afford them.
There are 150,000 ‘mortgage prisoners’ in this situation in the UK – still living in their homes but unable to fulfil the affordability criteria to get a better mortgage deal.
The rules can have real life consequences. One area, on the radar of relationship support charity Relate, is households where a relationship has broken down.
This can leave one party paying a more expensive mortgage or stuck in a mortgage with an abusive partner, as our investigation reveals.
Lenders claim to be sympathetic to the plight of these borrowers. But the reality is that “a mortgage is a legal contract and like many contracts is not an easy one for someone to extract themselves from”, says Claire Sweet, a financial adviser and money coach who specialises in helping women trapped in mortgages with former partners.
She became a financial adviser in her 20s after a relationship breakdown left her in a financially precarious situation.
“I was renting with my boyfriend at that time,” she recalls. “It was my name on the rental agreement and when he left me, I realised how vulnerable I was. I vowed never to be in that situation again.”
Ms Sweet says that although some of the women who she helps fall under the definition of the FCA’s mortgage prisoner, many are trapped simply because they didn’t know enough about their legal rights.
My ex is still on the mortgage, six years after we split
Helen*, 48, is one such borrower. She took out a 10-year interest-only mortgage with her now ex-husband in July 2010.
Helen, who has a three-year-old daughter with her current partner, divorced her ex-husband in 2011. His name is no longer on the deeds of the house although his name remains on the mortgage.
Helen and her family live in a two-bedroom flat in London that she bought in 1995.
A year after buying the flat she met her husband. “When we married I put him on the deeds of the property,” she says.
Initially, Helen and her husband were on a repayment mortgage but after he was made redundant they found they needed to refinance.
“For various reasons he wasn’t working, and we had debts. We were struggling,” says Helen.
Because the flat’s lease had less than 70 years to run, and because her husband was several years older than she, Helen struggled to get a deal.
In the end a mortgage adviser found her a 10-year interest-only deal with Santander.
“I did question whether paying interest-only was a good idea – but was told by my adviser that something would come up,” she says. “He said to me, ‘A lot can change – you might win the lottery, or you might get a better paying job.’
“We had no savings and no way of paying off the capital. The attitude was that something would come up and we trusted them. The adviser was a nice guy trying to help us, and the lender was offering us a solution. This was the only deal that was offered, and I was desperate.”
Helen wasn’t asked for proof of earnings, so the loan was made on a self-certification basis.
The couple split a year later, in October 2011.
Helen’s monthly repayments are now £750. “I have never missed a mortgage payment. I have been through a long divorce, a stillbirth, miscarriages and maternity leave, and kept paying throughout.
“I did ask for a repayment holiday when things got really tough financially, but Santander said no.”
Earlier this year Helen started looking around for a new mortgage deal with her new partner, knowing she had a year left to remortgage.
Santander could not offer her another deal.
“Because my ex had been on the mortgage there was an issue with affordability. Not only that, I needed my ex-husband’s signature and permission to do anything with the mortgage.”
Helen is no longer in contact with her ex.
“We parted on bad terms, but Santander has repeatedly refused to take him off the mortgage, even though he has signed legal documents to say he has no rights to the property and he has been removed from the deeds.
“Santander knows that I’ve been paying the mortgage alone for nine years.”
Santander won’t give her a new mortgage. “On paper I can’t afford the mortgage, but the reality is I have paid it through thick and thin,” she says.
Helen’s flat is currently worth more than £400,000 and her mortgage is £223,000.
“I do have the issue of the short lease, which devalues it. But two of the flats in my block were sold three years ago for £550,000, and, recently, a similar property in the street went for £650,000.
“It has been six years since my ex moved out. I’ve got a daughter and a new partner. It’s true that if anything, he should be concerned because if I can’t pay the mortgage the responsibility falls to him.”
Ricky Chan, a chartered financial planner, says Helen has been caught out by stricter lending criteria that were introduced in 2014.
“Lending has tightened up over the years, driven by concerns by the FCA about consumers being too indebted and overstretching themselves,” he explains.
“The good thing is that Helen’s ex-husband has been removed from the title deeds, so this means he does not own the property, but he is liable if she can’t pay it, which isn’t so bad.
“However, I presume this unfortunate issue revolves around inconvenience and not having a clean break from her ex-husband.
“Also the issue of affordability means that it appears Helen’s income alone isn’t sufficient to get the borrowing required to cover the mortgage.
“If she does ever buy with her current partner she should also speak to solicitors about drafting a declaration of trust to protect her equity in the property.”
A spokesperson for Santander says they don’t comment on individual cases: “We will look at each case based on its circumstances but in situations such as an abusive relationship, exceptions can be put in place for a single signatory.”
Santander says that it does take steps to make sure vulnerable customers, such as women who are in an abusive relationship, are protected.
“For example, sending any communication to different addresses and arranging individual appointments.”
How to break up with your ex
- Find a good mortgage broker – Claire Sweet says looking at all your mortgage options is important, so find an independent adviser who can scour the market for you.
- Have legal agreements in place. Ms Sweet adds: “With the benefit of hindsight this is easier, but when you are in a romantic relationship with someone, it’s normal to take things on trust. But it’s a good idea to have it all written down.”
- Have as much proof as you can – of earnings, in particular, if you are self-employed. This will maximise the amount you can borrow.
- Keep up your repayments – easier said than done but it will help your case if you need to switch your mortgage from a repayment to an interest-only one.
Abusive ex stopped me selling my house
Heather* is 46 and has two children, aged 13 and 11.
Heather lives in Frome, Somerset, and is director of a public relations consultancy.
Three years ago, she bought a house with her then partner. “He wasn’t working at the time but he did have a deposit.”
The couple put £60,000 each into the house, which they bought for £375,000.
Heather took out the mortgage in her own name. The deeds are also in her name.
“At the time he had no earnings and I was earning more than £50,000 a year, and still am.”
Heather split with her partner earlier this year.
“He got abusive and the police had to get involved. It was a bad split to say the least.
“I decided the best thing to do would be to sell the property, and I assured him he would get his £60,000 back plus his share of any profit we might make.
“Thing is he didn’t agree, and he didn’t want us to split up.”
Heather’s ex went to court and had a notification of a charge put on the property. Heather says that as a result an offer on the house fell through.
“I’m now resigned to keeping the property,” she says. “However, I do need to remortgage.”
Heather is on a fixed rate of 2.5%, and although she has debts of £15,000 she has been told that she should be able to get a cheaper deal.
“Luckily, I can afford the mortgage, but I have to live in a house that ties me to an abusive relationship.
“He wanted the garden, saying it is worth £100,000, as well as his money back, plus half the profit.
“I have to wait until he takes me to court and this is settled in my favour. He won’t be able to afford that as I had to pay for everything when we were together.”
*Names have been changed to protect privacy.
Stuck together because we can’t sell
Rae Radford, 56, is a social media consultant living in Kent.
She says: “I’m not a traditional mortgage prisoner. I supported my ex financially while he studied, so I only paid a small percentage of the mortgage. But I split with him in 2017.
“I am concerned that because of my age and the amount outstanding on the loan, it is more difficult to remortgage. So we are stuck on a high-interest deal until we can sell the property.
“It’s a lovely home, but I think it’s a buyers’ market at the moment. We can’t sell our house and we are stuck with a mortgage charging 5.9%.”
Vicki Harris, managing director at Kensington Mortgages, says lenders have their hands tied, and while the FCA’s consultation was likely to help some borrowers, there would be others who will remain trapped.
“The FCA’s consultation should mean that people on interest-only or higher-interest mortgages will be able to switch to a cheaper deal, providing they have kept up their mortgage repayments and they are with an active lender,” she says.
Help for mortgage prisoners on the way
Mortgage prisoners should soon be able to switch to cheaper deals following the FCA’s consultation paper.
So long as they can prove that they can afford to keep up their monthly payments, lenders will have to offer people in this situation a better deal.
The FCA’s changes were announced in April 2019 and are part of a consultation with lenders and financial experts. The consultation ended on 26 June with guidance expected later this year.