Alan Clements, 71, took out a mortgage with Northern Rock but saw the loan snapped up by an offshore company when the bank went bust
Alan Clements is about to go into hospital for an operation. The 71-year-old has been receiving treatment for bowel cancer since 2021.
But this isn’t the only battle on Alan’s mind. As he prepares for major surgery, he faces losing his home after almost two decades trapped on a mortgage rate that currently stands at 8.5 per cent.
Sitting in his home in Matlock, Derbyshire, he tells The i Paper: “I’m retired… how can I possibly afford £4,300 a month?”
Alan is a mortgage prisoner – one of an estimated 166,000 people stuck on high-interest “closed book” mortgages since 2008 after their lenders went bust in the financial crash. Many of them are unable to remortgage.
Alan bought his home – a six-bedroom former corn mill – in 1996 for around £220,000. He took out an interest-only mortgage with Northern Rock for around £200,000 and later took out a second loan for renovations, which increased his borrowing to £540,000.
Today he lives there with his wife, Alesia and their nine-year-old daughter.
When Northern Rock collapsed in 2007, Alan’s mortgage was transferred to the Government-owned Northern Rock Asset Management (NRAM).
Things were “fine for a while” after 2008, Alan says, but then his mortgage was sold by the Government to an offshore investment fund called Cerberus, which collected the interest on former Northern Rock loans via a company called Landmark Mortgages.
Landmark has launched proceedings to repossess Alan’s home, which he and Alesia run as a B&B, as well as the adjacent gardens, which he has cultivated for 30 years and hosts regular meditation retreats.
Even though the Bank of England’s base rate is currently 4.25 per cent and the average variable mortgage rate is less than 7 per cent, Alan is currently being charged 8.5 per cent interest by Landmark. In recent years, his rate has surpassed 9 per cent.
Alan’s interest-only repayments are currently £4,300 a month, and he is now £95,000 in arrears.
“I earned a lot as a marketing executive when I took out the mortgage with Northern Rock. But now I’m retired… how can I possibly afford £4,300 a month?” he says.
Alan and Alesia started running their home as a B&B to keep up with mortgage payments, but his cancer diagnosis compounded the problem when he was forced to step back from the business.
Alan says that his interest rate with Landmark has “always been around 4 per cent above the base rate” with repayments of approximately £2,000 per month.
“It was always a big strain for our family, but when the consecutive interest rate hikes from 2021 pushed the monthly payments to over £4,400, it was just impossible.”
“We’ve been paying above average interest rates for years – as high as almost 10 per cent some months – and then when I got cancer, we fell into more arrears.”
Alesia is extremely worried about her husband. She says his cancer diagnosis “combined with this financial pressure to create a real perfect storm” for their family.
“As we were rapidly falling into arrears, we pleaded with Landmark to help us, but apart from abrupt letters and a short-term concession, they were never prepared to discuss our situation constructively and help us find a way out,” Alesia adds.
Alan has put his house up for sale along with some of the land around it at £725,000, but says he now owes Landmark a total of £640,000. Even if he can arrange a sale before his home is repossessed, he must raise enough to clear his debts and will likely be left with very little money to either rent or buy a new home.
Alesia said she “doesn’t understand” why Landmark are insisting on legal proceedings when the house is up for sale. “It’s making us all have a breakdown,” Alesia said. “They won’t communicate about it with us, they’re just insisting on a court date.”
“We have a viewing of the house next week, but it’s impossible to function under all of this pressure,” she added.
“I’m being watched by the mental health team,” Alan says. “Because they’re worried about what I might do because of all of this.”
Rachel Neale, a former Northern Rock customer and campaign lead at Mortgage Prisoners UK, said: “I am both shocked and heartbroken” by Alan’s story.
“Not only is Alan fighting cancer, but he has also done everything in his power to try and stop Landmark from taking his livelihood and his home.”
As The i Paper has previously reported, mortgage prisoners have accused Landmark of charging them high interest rates and being unsympathetic to their financial difficulties.
A spokesperson for Landmark Mortgages said: “It is deeply unfortunate that Mr Clements has got into such considerable arrears, especially given his health concerns.
“We are deeply sympathetic to his situation and have made extensive efforts over a very long period to try to help him to sort out his finances. We have waived substantial fees, and we have offered several repayment concessions, tailored to his situation that would have provided him an opportunity to improve his finances, but he has not been able to agree a meaningful repayment plan.”
“The unfortunate reality is that Mr Clements simply cannot afford this substantial six-bedroom, four-acre property, most of which was originally acquired with an interest-only mortgage.
“Every day he remains here, the debts associated with this property will only increase further, and the equity will be reduced for all parties involved.
“Seeking possession is only ever a matter of last resort for us, when all other avenues have been exhausted. We hope that Mr Clements will be able to sell the property within this period to help get his finances in order. We will continue to help where we can.”
The Financial Conduct Authority (FCA) has issued guidelines as to how closed-book companies, like Landmark, should treat mortgage prisoners. They say that “fairness” should be prioritised and that “vulnerable customers” should be supported.
An FCA spokesperson said: “Repossession should only be used be a last resort. Firms must allow the customer a reasonable period of time to sell their home when an adequate payment arrangement cannot be made.
“We have been clear about this and about the need for firms to treat vulnerable consumers fairly.”
- Are you a mortgage prisoner? Please do get in touch with your story: vicky.spratt@theipaper.com