Cannot repay interest only mortgage at end

Thrugelmir

Senior_Paper_Monitor wrote: »

Mr Thrugelmir ....

"Regulation of brokers" !!!!!

You are joking of course ?

Brokers are regulated half to death (unlike the bank salesforce) - that doen't mean there aren't bad/evil/incompetant brokers, it just means that the regulatory structure isn't right.

Back in 2005 there were around 18,500 mortgage brokers in the Uk. The majority of them small. With the best will in the world who regulated them?

There is a material difference between what a broker and an internal sales person can do in terms of processing the application.

By regulation, I mean enforcement of properly structured rules that are as much about protecting people from themselves, i.e. affordability. As outright fraud.

dunstonh

Brokers are regulated half to death (unlike the bank salesforce) - that doen't mean there aren't bad/evil/incompetant brokers, it just means that the regulatory structure isn't right.

I know the mortgage brokers feel they are regulated to death. However, mortgage regulation was considered light touch when introduced and at a lower than that which occurs with investment class business.

If you want to be regulated to death then become investment regulated !

I do think things improved post mortgage regulation but it still allows cowboys to operate. Although I think the problem is historic. The background of the broker was always to be able to get a person a mortgage. Look a the following cycle:

1 - The consumer who cant afford it is desperate to get a mortgage.
2 - The good broker realises this and says no you cant get one. The consumer sees that broker as bad
3 - the bad broker gets the mortgage by various means. The consumer sees that broker as good.

Chinkle

Renovationman - I understand your suspicions it does sound like a very strange scenario, but we don't know the circumstances - could be someone who wasn't even a broker who pursuaded them this was a quick-win way to own their house.

Magpiecottage - sounds like an easy cop-out for the individuals concerned. However, doesn't sound like the couple involved have gained any financial foresight even now things are near crunch point, so can't see them actively following this route, especially now UKClare herself has washed her hands of them. Some people will just be ostriches till the day they die!

Senior_Paper_Monitor

Dunstoh,

I fully appreciate that the investment side suffers even more - the fact remains the solution lies in properly constructed and consistently applied regulation, not simply in placing layers of administration on certain sectors of a market.

My main comment was in response to Mr Thrugelmir's suggestion that 'regulation of brokers' would avoid this sort of situation (and the inferenec they weren't regulated).

I speak as a relatively new boy to the financial industry (but I come from a heavily, long term regulated one with an even bigger need for approporiate regulation to save us killing people) but it would be my opinion that much of the regulation seen is 'knee-jerk', administratively - therefore cost, which in turn must impact on the user - heavy, inflexible and finally, comparatively inefective.

The three issues you list at the end of your post are succinct and 100% valid - what it is difficult to do (and current and proposed regulation blatantly fails to do do) is differentiate between 2 and 3, where a good broker can within what anyone would consider 'good advice' help someone in a non-standard position obtain finance, fully understand any risks/implementation and plan over a period of time and changing circumstances.

With regard to the circumstances defined in the OP (as far as we can understand the history) no-one would argue that regulation should have stopped this incident - we are not quite sure which regulatory environment this occured under but it should not have happened under the auspices of any good broker/adviser anyway.

wymondham

ukclare wrote: »

Wow - someone is perceptive! They have no idea of the sleepless nights and hours I have spend on the net and on the phone trying to look for answers!

ukclare, what have your friends been doing themselves to try to sort their own problem out? It's really noble of you to help like this but with financial matters I'd put money on you don't know all the facts as people tend to be closely guarded of these when it comes to finance. Be careful you don't inadvertantly guide them in the wrong direction (based on limited info)..

I'd politely step back and let them look into this as they obviously need to learn and learn fast how this all works....

MegaMiniMouse

UKCLARE - your friends are in an almost identical situation to my own, and I have received nothing but abuse on this site because I was foolish enough to accept the professional advice of various financial advisers - check out my earlier posts

I have been researching intensively into all of this, and I have accumulated quite a lot of knowledge, so PM me if you would like to share (Like your friends, I am close to retirement)

MM

PasturesNew

carlw wrote: »

and rent it back to them.

That might work, except the OP probably doesn't want to be a LL, especially to such f3ckless folks.... I fear rent would be a bit short on many occasions.

Then, if they should need any kind of LHA top ups once they retire, the question will most likely raise its head of the fact they used to OWN the house, so LHA might not be forthcoming. So then, I doubt they'd think twice about not paying the rent at all, with a glib "well, you'll profit tons when you sell it....."

It'd be a ruinous path for the OP to even consider.