Help for people in mortgage trap

16 June 2007

A rescue package has been announced for thousands of people suffering hardship because of a controversial mortgage they took out in the 1990s. 

Shared Appreciation Mortgages enabled customers to borrow around 25% of the value of their property.  But they had to agree to pay back 75% of the increase in the home’s value if they sold – which left many unable to move.

Now Barclays says it will replace 2,500 mortgages with a loan to be paid off later or upon the customer’s death. 

In 1998 when customers signed up to Shared Appreciation Mortgages, the interest-free mortgage deal seemed attractive.  But the sharp rise in property prices in the last 10 years has led many to regret their decision. 

Following the announcement of the rescue package, Elaine Williams – who’s negotiated with Barclays on the mortgage holders’ behalf, welcomed the news.  She said:  “It will enable people to move.  They won’t be trapped any more because there’s now a way out.  Where they’re in a two-storey house and they need single-storey, they can move.  This enables people to get on with their lives.”