Self-cert " made up nearly half of all the mortgages offered at the peak of the boom"

whathavewedone

I think there's a loophole here so far as remortgaging is concerned.

The FSA has not put a cap on salary multiples therefore if a couple bought a house at 4, 5 or 6 times their salary and have been paying their mortgage on the nose at a fixed rate of say 5 or 6% for the last few years without getting into debt then I would have thought it would make more sense for their lender to allow them to fix again than put them on the SVR, especially if they still have equity in their property.

It will be a problem for those who have been just about getting by on a tracker or those who have other debts but then those people were always going to be exposed once interest rates increased, food prices went up etc.

There has to be a balance so that those who really can't afford a mortgage and/are irresponsible with money are not allowed to get one but those who are willing to spend the largest proportion of their salary on their mortgage are allowed to do so provided they can show that their employment is stable and that they are sensible with money and don't live beyond their means. This can easily be checked by going through previous bank statements and in the case of existing borrowers if a person/couple has been paying their mortgage and other bills without getting into debt then they should be deemed as low risk.

I think it would be very unfair if people who borrowed 4 or 5 times their salary at a time when this was considered conservative, who are still employed, not in debt and have equity in their property were not allowed to remortgage.

chucknorris

whathavewedone wrote: »

I think there's a loophole here so far as remortgaging is concerned.

The FSA has not put a cap on salary multiples therefore if a couple bought a house at 4, 5 or 6 times their salary and have been paying their mortgage on the nose at a fixed rate of say 5 or 6% for the last few years without getting into debt then I would have thought it would make more sense for their lender to allow them to fix again than put them on the SVR, especially if they still have equity in their property.

It will be a problem for those who have been just about getting by on a tracker or those who have other debts but then those people were always going to be exposed once interest rates increased, food prices went up etc.

There has to be a balance so that those who really can't afford a mortgage and/are irresponsible with money are not allowed to get one but those who are willing to spend the largest proportion of their salary on their mortgage are allowed to do so provided they can show that their employment is stable and that they are sensible with money and don't live beyond their means. This can easily be checked by going through previous bank statements and in the case of existing borrowers if a person/couple has been paying their mortgage and other bills without getting into debt then they should be deemed as low risk.

I think it would be very unfair if people who borrowed 4 or 5 times their salary at a time when this was considered conservative, who are still employed, not in debt and have equity in their property were not allowed to remortgage.

Yes that seems logical to me.

chucky

Wookster wrote: »

This is getting a bit tiresome. It seems I need to go slower to get this into your think head.

The article states:



Liars loans = self certified loans according to the article.

yes it is getting tiresome wookie baby - you''re struggling with the simplest of things.

just because the article say this it is the cae, it doesn't mean it is correct - they have generalised

fedupfreda

Is it me or am I the only one to have spotted that this is, at the moment, just a proposal?

The mortgage industry have until 30 Jan 2010 to make their feelings known.

Plenty of time for the vested interests to put paid to a long overdue dose of common sense.

Don't believe it until you see it actually happening. But I agree - the changes are vastly overdue.

stuart7899

This is crazy. Removing self cert will put the brakes on in the housing market even more.. just when it needs to recover!

Lotus-eater

I swear I saw a lady doctor on the BBC news yesterday complaining that these mortgage proposals would make it almost impossible for her to get a mortgage.
I did think, well if it's impossible for a Dr to get a mortgage and a house, what chance for normal people where she lives.

And of course I did find myself saying to the Mrs, that it's not the mortgages that are the problem, it's the price of houses, suprised the Dr didn't get that herself.

lemonjelly

I'm also wondering if this could have some alternative impact, perhaps on money laundering? I'm a layman, so am prepared to get shot down in flames for this, but I seem to recall reading articles & reports from the FSA that people used these types of loans in money laundering scams?

I have no issue with overtime /unsecure income not being included when assessing mortgage applications. These incomes are not guaranteed under employment contracts, & could cease at any time. Therefore, imagine 3 months into a mortgage, your overtime stops, & household income falls by £150 a week. How can you continue to service the mortgage & all other financial obligations> In my experience, people tend to borrow "as much as they can" as opposed to "as much as they can afford".

I also wonder how/if it will affect other facets of life. In example, I have seen numerous case where people (mainly in occupations such as taxi driving, or other jobs which can be self employed pt or ft) where the SE person applies for the likes of tax credits, on the basis of only working 16 hours a week, having a number of kids, thus getting the maximum tax credits available. In reality, they're working 60-70+ hours a week, & haven't included tips etc either. Which income will they use for mortgage applications, & will it make detection of fraud more or less likely?

Thrugelmir

whathavewedone wrote: »

I think there's a loophole here so far as remortgaging is concerned.

The FSA has not put a cap on salary multiples therefore if a couple bought a house at 4, 5 or 6 times their salary and have been paying their mortgage on the nose at a fixed rate of say 5 or 6% for the last few years without getting into debt then I would have thought it would make more sense for their lender to allow them to fix again than put them on the SVR, especially if they still have equity in their property.

Its not a loop hole. The borrowers will have little choice but to go onto the lenders SVR when there existing deal ends. Due to a lack of equity and earnings they may well not be offered a remortgage deal. The self cert lenders have above average SVRS.

Lloyds are closing down HBOS's old IF mortgage division. Borrowers are only being offered the SVR when their deal ends. Many are trapped as are unable to remortgage elsewhere.

Thrugelmir

lemonjelly wrote: »

I also wonder how/if it will affect other facets of life. In example, I have seen numerous case where people (mainly in occupations such as taxi driving, or other jobs which can be self employed pt or ft) where the SE person applies for the likes of tax credits, on the basis of only working 16 hours a week, having a number of kids, thus getting the maximum tax credits available. In reality, they're working 60-70+ hours a week, & haven't included tips etc either. Which income will they use for mortgage applications, & will it make detection of fraud more or less likely?

All a self employed person has to do is provide a copy of their tax assessment form. This will prove their income. If income isn't declared how can you prove you earn it?

Thrugelmir

Wookster wrote: »

What?? Most people have contracts of employment/ P60s/ tax returns/ company accounts etc.

This shouldn't be a big problem for people - maybe they'll have to wait a bit longer to get their mortgage so they have a track record of incomes but prudence isn't a bad thing.

What I think will be a real issue is how many people have been dodging tax and how this affects their ability to keep doing so in the future.

My reference was in the context of self cert where people's income, is shall I say from different sources. Some declared for tax purposes , some cash in hand, some maybe illegally obtained even.

Yes they have mortgages now, but are stuck where they are. Unable now to move.