Lloyds Checking IO Mortgages for Fraud and other stories

ILW

olly300 wrote: »

A Badger and then blueboy43 have already pointed out that what lenders think is a credible repayment vehicle has been shown by history not to be one.

And I've pointed out that there are people who have repayment plans which aren't actually a vehicle. You can look at their accounts from past years but that is still not a repayment vehicle.

Endowment mortgages were found to have been mis-sold in lots of cases. I had a friend on an ISA mortgage so I related all the information I gleamed on endowment mortgages to them. They talked it over with one of their wise parents and ended up changing to a repayment mortgage.

Maybe a compulsory five year review of the vehicle, and if not on target and automatic transfer to repayment mortgage.

olly300

nearlynew wrote: »

Most people who take out IO mortgages do so because the lower monthly payment enables them to "buy" a more expensive house than they could otherwise afford.

How do you know have you asked them?

To be fair with the two groups I know the business people took out IO mortgages because it helps with variable cashflow.

Yes they could take out a repayment mortgage but then if times are hard their repayments are lower.

mcc100

https://forums.moneysavingexpert.com/discussion/2634413

Clearly investigations by Lloyds Banking Group are gathering pace

olly300

ILW wrote: »

Maybe a compulsory five year review of the vehicle, and if not on target and automatic transfer to repayment mortgage.

As I've pointed out before some people don't have a vehicle due to how they work.

Plus politicians will be told off for interfering.

The best thing to do is to prevent banks lending too much money out in the first place and borrowing too much from the markets like NR, and having to get the taxpayer to bail them out. That way they will have more caution to whom they give any mortgage type to.

For example Nationwide BS had stricter lending criteria which meant they didn't give out loans of 5-6x income to people, and also didn't borrow a lot from the financial markets. Hence ended up being encouraged to swallow up smaller BS who had lax lending criteria when these smaller BS where in trouble.

Likewise LloydsTSB also had stricter lending criteria and were healthy until they swallowed up HBOS. Which is why this thread exists.

nearlynew

olly300 wrote: »

How do you know have you asked them?

Yes, I've asked a big enough sample of people over the years to come to that conclusion.

And I personally know a few mortgage brokers so I know exactly how the conversation goes during a meeting with a client to arrange a mortgage.

michaels

And those renting not buying are probably living in a bigger property than they could afford to buy. The former may have built up some equity with rising prices come retirement, the later certainly will not have done.

nearlynew wrote: »

Most people who take out IO mortgages do so because the lower monthly payment enables them to "buy" a more expensive house than they could otherwise afford.

Thrugelmir

olly300 wrote: »

If the worse came to the worse and they had to take their pensions they could still afford to continue paying their mortgages as the repayments are very low.

Knowing somebody that does. Is taking a very narrow view.
Markets move with the majority not the minority.

In 2009 around 35% of private sector employees contributed in any form to a pension scheme. This compares to 48% in 1999.

ILW

michaels wrote: »

And those renting not buying are probably living in a bigger property than they could afford to buy. The former may have built up some equity with rising prices come retirement, the later certainly will not have done.

Difference is that it is unlikely that a renter will have a debt of 100s of thousands.

michaels

Why are the banks looking to see if any T&C are being broken? - easy.

Consider you are lending to someone with an ltv of above 90% but they are on a good rate, may be a 1% over base tracker or a capped 2% over svr. Now suppose you can find some irregularity with their mortgage - may be they lied about their income or don't have a repayment vehicle for their IO loan. Now you have them - offer them your current product that matches their circumstances (say base plus 4.5% - or even more) safe in the knowledge that they can't get a better deal elsewhere - kerching!!!!

And spin it as being responsible and there are people who will be taken in even on house price forums like this. GD would like me and RenoMan to go repayment. We have 40% equity in our houses to cushion the banks for any risk so how would a repayment of 50 quid a month make any material difference to the the lenders risk?

olly300

Thrugelmir wrote: »

Knowing somebody that does. Is taking a very narrow view.
Markets move with the majority not the minority.

They are all married and one partner is younger than the other by a good few years.

With low repayments even if the higher waged partner was the one forced to retire they could still manage the repayments.

BTW this I use partner as it's not always the male who is the oldest or earns the most. Obviously they would be screwed if they got divorced.