Trapped by an 8.5% Mortgage for Years, Now Facing Eviction While Battling Cancer

Alan Clements is set to enter the hospital for surgery. At 71 years old, he has been undergoing therapy for bowel cancer since 2021.

However, this is not the only concern weighing on Alan’s mind. While he gets ready for significant surgery, he also confronts the prospect of losing his home after being stuck in a mortgage with an interest rate of 8.5 percent for nearly twenty years.

From his house in Matlock, Derbyshire, he shares this information. The i Paper “I’ve retired… how am I supposed to manage with £4,300 a month?”

Alan is a mortgage prisoner - One of approximately 166,000 individuals trapped in high-interest "locked" mortgage deals since 2008 following the collapse of their lending institutions during the financial crisis. Numerous borrowers find themselves unable to refinance these loans.

In 1996, Alan purchased his residence—a six-bedroom ex-corn mill—for approximately £220,000. He secured an interest-only mortgage from Northern Rock amounting to about £200,000. Subsequently, he obtained another loan for refurbishments, raising his total debt to £540,000. .

Currently, he resides there with his spouse, Alesia, along with their nine-year-old daughter.

In 2007, when Northern Rock went under, Alan’s mortgage was moved to the government-controlled entity called Northern Rock Asset Management (NRAM).

Alan mentions that things remained "acceptable for some time" following 2008. However, later on, his mortgage was transferred from the government to an overseas investment firm named Cerberus. This entity gathered the interest from previous Northern Rock loans through another business known as Landmark Mortgages.

Landmark has initiated legal action to reclaim Alan’s house, where he and Alesia operate a bed-and-breakfast business. Additionally, they seek possession of the adjoining gardens that Alan has tended for three decades and frequently uses to host meditation retreats.

Despite the Bank of England’s base rate standing at 4.25 percent and the typical variable mortgage rate being under 7 percent, Alan is presently paying an interest rate of 8.5 percent with Landmark. His interest rate has even exceeded 9 percent in the past few years.

Alan's monthly interest-only payments amount to £4,300, and he is presently behind by £95,000.

"I made substantial earnings as a marketing executive back then, which allowed me to secure a mortgage with Northern Rock. However, since my retirement... how am I supposed to manage such an enormous monthly payment of £4,300?" he asks.

Alan and Alesia began operating their house as a bed-and-breakfast to meet their mortgage obligations, yet Alan’s cancer diagnosis worsened the situation when he had to withdraw from managing the enterprise.

Alan mentions that his interest rate from Landmark has "consistently been about 4 percentage points over the base rate," resulting in monthly payments of roughly £2,000.

It has consistently been challenging for our family, but once the continuous interest rate increases starting in 2021 caused the monthly payments to exceed £4,400, it became unmanageable.

We've been paying higher-than-average interest rates for years — sometimes reaching nearly 10 percent certain months — and when I was diagnosed with cancer, we slipped further behind.

Alesia is deeply concerned about her husband. She mentions that his cancer diagnosis "along with the financial strain has created a really perfect storm" for their household.

"As we quickly fell behind schedule, we reached out to Landmark for assistance, yet aside from brusque correspondence and a minor temporary adjustment, they were unwilling to engage in constructive dialogue or aid us in finding a solution," Alesia notes.

Alan has listed his property including surrounding land for sale at £725,000; however, he currently owes Landmark a sum of £640,000. Despite potentially managing to sell the property before it gets repossessed, he still needs to generate sufficient funds to settle all debts, leaving him with minimal resources to afford renting or purchasing another residence.

Alesia mentioned that she "can't comprehend" why Landmark is pushing for legal action despite the house being on the market. She added, "This situation is driving everyone crazy." According to her, "There has been no communication from their side regarding this matter; they're only fixated on setting a court date."

"We have a property showing next week, however, it's difficult to operate under such immense stress," she mentioned additionally.

I'm under observation from the mental health team," Alan explains, "because they're concerned about my actions due to everything that has happened.

Rachel Neale, a previous Northern Rock client and leader of the campaign group Mortgage Prisoners UK, expressed her shock and sorrow upon hearing about Alan’s situation.

Not only is Alan battling cancer, but he has also gone above and beyond to prevent Landmark from seizing his source of income and his house.

As The i Paper has previously reported , mortgage prisoners have complained Landmark for imposing high-interest charges and showing little compassion for their monetary hardships.

A representative from Landmark Mortgages stated: "It is profoundly regrettable that Mr. Clements has fallen into substantial debt, particularly considering his health issues."

We feel a deep empathy for his circumstances and have put in considerable effort over an extended timeframe to assist him with managing his financial matters. We have forgone significant charges and presented multiple customized repayment options designed to aid him financially. However, despite these offerings, he hasn’t managed to establish a viable repayment strategy.

The sad truth is that Mr. Clements can't manage to pay for this large six-bedroom, four-acre estate, much of which he initially purchased using an interest-only loan.

Each day he stays here, the debts linked to this property will keep increasing, resulting in less equity for everyone concerned.

Acquiring ownership is something we consider solely as a final option after exhausting all alternatives. We trust that Mr. Clements will manage to sell the property during this timeframe to improve his financial situation. We remain committed to offering our assistance wherever possible.

The Financial Conduct Authority (FCA) has released guidelines outlining how closed-book firms such as Landmark ought to handle mortgage prisoners. The emphasis is on ensuring "fairness" and supporting "vulnerable customers."

A representative from the FCA stated: "Repo should only be considered as a final option. Companies are required to provide customers with sufficient time to sell their property when they fail to arrange appropriate payments."

We have made our position clear regarding this issue and the necessity for companies to ensure fair treatment of customers who may be more susceptible.

• Have you found yourself trapped as a mortgage prisoner? We'd love to hear from you about your experience: vicky.spratt@JWtimurnews