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MSE News: FSA plans self-cert mortgage ban

edited 19 October 2009 at 3:05PM in Mortgages & Endowments
23 replies 4.3K views
Former_MSE_NatashaFormer_MSE_Natasha
672 posts
edited 19 October 2009 at 3:05PM in Mortgages & Endowments
This is the discussion thread for the following MSE News Story:

"The City watchdog announced proposals today to ban self-certification mortgages and ensure all borrowers prove their ability to repay in advance ..."



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Thanks to moosegirl for the original post. These two threads have been merged to prevent duplication.
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Replies

  • It seems that these types of mortgages are going to be banned. How will that effect those that already have them? We have one and my concern is that we won't be able to get a mortgage on this property again. Will they cancel existing ones or when you come to remortgage presumably it won't be possible to get a new deal? As it is we're stuck in negative equity and we can't any other deal other than letting this one run so we're on standard variable. We bought as everything started falling -Sept 07. Any help appreciated thanks.
    Current a/c OD-£2,300-now costing £30 pm :eek:Single a/c OD-£550 - now also costing £30 pm Barclaycard 0%-£2853.30 Barclaycard 6.9%-£3487
    Halifax-19.8% - £274.34 Santander-16.9%-£106.05 Halifax Loan-6.9%-£160.11-finishes May 2015 :)Tesco Loan-7.9%-£264.80-finishes Dec 2014:) Total Debt as at 29.5.12- £20,244. :eek:
  • koexelekkoexelek Forumite
    7.8K posts
    You will have to stay with your current lender. You will have a choice of remaining on their standard rate ( which is usually a good option in the current climate) or they may offer you a new product from their new range
    I am a Mortgage adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Hi moosegirl

    Dont worry your not the only one in this dilema! We bought our house in feb 2006 we are now also in negatiuve equaity with a self cert mortgage. Our current deal ends in nov 2011 so this is really worrying for us. So does this mean we will not be able to shop around for mortages but instead will be stuck with our current lender? Why if they dont give us a mortgage?! Very worrying.

    Oh well, heres hoping!

    Thanks
  • koexelekkoexelek Forumite
    7.8K posts
    Hi moosegirl

    Dont worry your not the only one in this dilema! We bought our house in feb 2006 we are now also in negatiuve equaity with a self cert mortgage. Our current deal ends in nov 2011 so this is really worrying for us. So does this mean we will not be able to shop around for mortages but instead will be stuck with our current lender? Why if they dont give us a mortgage?! Very worrying.

    Oh well, heres hoping!

    Thanks

    You are probably worrying that your "deal" is coming to an end, not your actual "mortgage".
    For example, you might take a 25 year mortgage with an initial 5 year fixed rate.
    In your situation, it means you might not be able to get a new deal at the end of the initial 5 years, but you don't have to clear the mortgage until the end of the 25 year term.
    As long as you continue to make all payments on time, you should have nothing to worry about.
    If you are currently on a fixed, the chances are that your paymemts will go down, anyway
    I am a Mortgage adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • benjobenjo Forumite
    482 posts
    I read the headline and initially thought that the banning of self cert mortgages meant people who are self employed would not be able to get a mortgage deal, then I read the whole thing and ...No it doesnt mean that, it means that self employed people are still able to get a mortgage IF they can prove their income...lenders would be responsible for assessing a consumer's ability to repay their loan, taking into account their monthly disposable income. Nothing different here to what happens for the vast majority of borrowers and lenders.

    I might be naive, but this could even be good news for the self employed. Presumably all self employed prove their income to the IR each tax year and so it shouldnt be a problem to do just the same with a mortgage lender, if this is the case wouldnt it be possible to qualify for high street lender deals at more competative rates than the self cert rates?

    On the issue of toxic combinations, it makes sense to clarify 'irresponsible lending' and to avoid doing that again, what on earth is the point in buying a house you cannot afford? Not only do you loose your home, but you loose thousands of pounds in interest, fees and penalties etc - isnt it better that someone tells you 'Im sorry, you cannot afford this, at this time'.

    There are any number of posts on the mortgage forums, from people who post their SoA's and it is quite obvious with hindsight that they could never have expected to service the loan for any length of time and now they face the heartbreak of repossession and eviction - I would prefer that my lender didnt lend me a penny more than I could afford to repay, I love my home and I never want to risk loosing it.
  • smk77smk77 Forumite
    3.6K posts
    Part of the Furniture 1,000 Posts Combo Breaker
    ✭✭✭✭
    moosegirl wrote: »
    It seems that these types of mortgages are going to be banned. How will that effect those that already have them? We have one and my concern is that we won't be able to get a mortgage on this property again. Will they cancel existing ones or when you come to remortgage presumably it won't be possible to get a new deal? As it is we're stuck in negative equity and we can't any other deal other than letting this one run so we're on standard variable. We bought as everything started falling -Sept 07. Any help appreciated thanks.

    I'm thinking the same. We're not in negative equity but do have a large mortgage that was easily within Nationwide's lending criteria 2 years ago when we took out a 2 yr fixed. Obviously at the moment we're enjoying the ability to overpay because we're paying the variable rate. However, since we took out that mortgage my son was born and my wife is working part time. This therefore affects our borrowing power and should we want to fix because rates go up we could find ourselves in the position that a lender believes that our income isn't enough for the mortgage. This could mean that we're stuck in a variable rate with absolutely no control over how much we'd have to pay each month. A little worrying!
  • smk77 - If you're not borrowing any more money then your current lender won't re-assess income.
  • smk77smk77 Forumite
    3.6K posts
    Part of the Furniture 1,000 Posts Combo Breaker
    ✭✭✭✭
    _Andy_ wrote: »
    smk77 - If you're not borrowing any more money then your current lender won't re-assess income.

    thanks. that's very useful to know. :beer:
  • I'm glad we're not the only ones! I'm just concerned that if we need to prove income we will never be able to borrow the amount we have been leant. As it is our deal finishes on 31 Oct and we have to go to the standard variable rate as our LTV is 102% despite putting down a lovely deposit. The mortgage company will not offer us a fixed deal until the LTV is 95%. House prices up, base rate too? Our repayments are going to fall but I know this is false in the long term. I don't like the uncertainty and really do not want to lose the house. We'll keep hanging on. Thanks for all the replies!
    Current a/c OD-£2,300-now costing £30 pm :eek:Single a/c OD-£550 - now also costing £30 pm Barclaycard 0%-£2853.30 Barclaycard 6.9%-£3487
    Halifax-19.8% - £274.34 Santander-16.9%-£106.05 Halifax Loan-6.9%-£160.11-finishes May 2015 :)Tesco Loan-7.9%-£264.80-finishes Dec 2014:) Total Debt as at 29.5.12- £20,244. :eek:
  • I might be naive, but this could even be good news for the self employed. Presumably all self employed prove their income to the IR each tax year and so it shouldnt be a problem to do just the same with a mortgage lender, if this is the case wouldnt it be possible to qualify for high street lender deals at more competative rates than the self cert rates?


    IMO the only self employed who could have issues are the newly self employed.

    Should somebody who has only be trading for say six months take on a 25 year mortgage commitment?
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