Mortgage prisoner single mother pays extra £91,000 thanks to high interest rates | Personal Finance | Finance


A single mum from Leeds has had to pay more than £91,000 extra after she became trapped on high-interest rates following the collapse of Northern Rock Bank.

Mortgage prisoner Rebecca Wendel, a self-employed hairdresser, is currently facing a staggering 9.79 percent , resulting in monthly payments of £2,150.

This marks a significant increase from the £1,049 she was paying in August 2022, when she had an above-market rate of 6.75 percent.

Ms Wendel has paid over the odds for her mortgage since 2008 when Northern Rock Bank who held her mortgage went bust, leading to her loan being sold on to Heliodor Mortgages, part of Topaz Finance.

Ms Wendel is one of over 200,000 homeowners whose mortgages were sold to finance companies that have persistently charged higher-than-market rates for these loans.

These people have become known as “mortgage prisoners” because stricter lending restrictions mean they cannot pass affordability checks which would allow them to access lower interest rates.

Ms Wendel said: “My kids haven’t had a childhood – they haven’t been able to do things with their mother that they would normally do.”

Last year, Ms Wendel was told that she was not eligible for a four percent interest mortgage as she “couldn’t afford it” and instead was told to stay on her more expensive scheme.

The 46-year-old from Leeds and her now ex-husband took out a mortgage of £284,000 with Northern Rock in 2007. She still owes the full amount 17 years later.

Ms Wendel and her ex-husband were previously on a repayment mortgage in 2007 when they were persuaded by a broker to temporarily switch to an interest-only deal to finance an extension.

She said: “He advised us to go interest only, save the money for two years and then go back to a repayment mortgage.”

But nine months into their deal, Northern Rock collapsed and their loan was sold to Heliodor Mortgages.

Since then, Ms Wendel has been unable to switch to a more favourable mortgage deal because of stricter lending criteria.

She has been struggling to pay the mortgage on her own since 2016 and says the constant interest rate rises since December 2021 have left her at breaking point.

Ms Wendel said: “It’s a constant, daily battle to get up and get on with the day knowing that at the end of it, there’s nothing to show for it other than being able to maintain the roof over my head.

“I’m taking it a month at a time now because it’s killing me. I’m working all the time, it’s just ridiculous. I’ve got no home life whatsoever, and we don’t do the things that other families do because I’m not at home.

“I can’t be at home because I have to be at work, that’s the only way I can earn enough money to keep this going.”

However, Ms Wendel has been given fresh hope that a landmark court case, due to commence in July this year, may help her reclaim some money back.

Law firm Harcus Parker, which is running a no-win, no-fee group litigation claim, believes that if the trial is successful it could set a precedent for all mortgage prisoners to be financially compensated.

It would mean Ms Wendel would be eligible to recoup an estimated £91,493 that she has been forced to overpay due to being trapped on high interests.

Ms Wendel said: “It makes me feel angry that I’ve paid so much extra money and makes me all the more adamant that this needs to be sorted out. If I can get the money back, it would go straight off my mortgage, and enable me to access a normal mortgage. I’d be about £1,000 better off each month, and that’s life-changing for somebody like me.

“The money would also enable me to stay where I am. At the moment I’m still 50/50 about putting the house up for sale. Part of me feels that’s giving up. But equally, I can’t afford to keep doing what I’m doing.”

Damon Parker, a senior partner at Harcus Parker, commented: “Tens of thousands of mortgage prisoners are still stuck on these high interest rates through no fault of their own.

“Ms Wendel’s case is typical of the financial pressure and misery caused to tens of thousands of mortgage prisoners.

“We are very hopeful that the trial in July, this year, will finally determine that these people are victims of an appalling financial injustice and should be allowed to recover the excess money that they have paid.”

Mr Parker added: “Our group litigation represents both current and former mortgage prisoners.”

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