Money saving expert Martin Lewis is demanding the government takes urgent action to help struggling homeowners and wannabe buyers.
He’s fired off a letter to the new Chancellor, Rachel Reeves, urging her to tackle two big problems: mortgage prisoners stuck on sky-high interest rates and unfair Lifetime ISA rules.
Mortgage prisoners left high and dry
Around 200,000 people are stuck as “mortgage prisoners”, meaning they can’t switch to a cheaper deal even though rates have plummeted. This is because their mortgages were sold off to other companies who don’t offer the same cheap rates available elsewhere.
Lewis says it’s a scandal that the last government promised to help but never did, despite experts coming up with solutions. He’s urging the new Chancellor to step in before more families face crippling debt, losing their homes or worse.
The desperate situation has even driven some to take legal action, with a group of mortgage prisoners taking their case to the High Court this week.
Unfair Lifetime ISA rules need fixing
Lewis is also demanding a shake-up of the Lifetime ISA scheme, which is supposed to help first-time buyers.
He says the rules are outdated and unfair, because the £450,000 price cap on homes hasn’t changed since 2017. Since then, house prices in England have soared by more than 27%, meaning many people, especially in London and the South East, are priced out.
If you withdraw money from a Lifetime ISA for any reason other than buying a house under the limit, you get hit with a 25% penalty. This means some first-time buyers are being penalised for using their own savings!
Lewis highlights that someone who saved £20,000 and got a £5,000 bonus would actually LOSE £1,250 if they had to withdraw their money, as the penalty would be £6,250!
Simple solutions available
The money-saving expert says there are simple fixes available, like allowing first-time buyers to use their Lifetime ISA savings without the bonus to avoid the penalty, or reducing the withdrawal penalty to 20%.
He also suggests raising the £450,000 limit in line with soaring house prices.
Will the government finally listen? Only time will tell, but one thing’s for sure: Martin Lewis won’t be letting them off the hook any time soon.