Interest Only Mortgages - proof of repayment vehicles

richards123

With regard to new mortgage applications, how many lenders actually ask for physical proof of repayment vehicles for interest only mortgages, does anyone know?

I'm reading that one lender asks checks out 1 in 20 interest only applications from brokers.

I also get the feeling that asking for evidence of repayment vehicles is more of a box ticking exercise as far as the lender is concerned ie covering their back and ensuring they 'are seen' to be lending responsibly..

In particular, how are RBS and the other high st banks in this regard and would the scrutiny be different between an online application and a branch based one?

Finally, does the LTV figure have a bearing ie someone wanting a 90% loan would be scrutinised far more than someone wanting a 30% loan?

Thanks:)

Ps apologies for the the grasping first post on the forum:o

Burridge60

Sounds like a lie to buy mortgage to me !

And yes I am a mortgage broker.

Why would you do this?

richards123

yes I can see your thinking however theres several ways you can repay a mortgage. At the moment I don't want a repayment vehicle but I do want interest only in order to keep costs down. In about 6 years time, the mortgage will be paid off by other means...

I guess I may not get an answer to the post even though I bet loads of people applying for interest only don't want a repayment vehicle and are wondering in private what I'm asking here...

Burridge60

The best bet is to try a mortgage broker as they will have a most cautious approach to an interest only mortgage and if your means of repayment is plausible and they feel they can document it accurately then they will find a lender to do it for you.

I am sure they wont "recommend" it to you and you will probably have to sign to accept it is "on your own head" but there are ways and means.

With the complain and claim culture I am sure you can understand why this would not be recommended to you.

richards123

thanks:) seems the irresponsible borrowers who have racked up huge interest mortgages with low equity and no means of paying it all back have spoilt it for the ones that have control over their finances. I'm going to be honest here, one direct major lender I spoke with on their mortgage hotline actually told me that proof of repayment vehicles is a box ticking exercise on their part and applications are seldom checked - the way they worded it and responded to my needling was a very strong hint if ever there was one! Maybe lenders are saying one thing in public and another in private. I do agree that some people should be saved from themselves though sad to say...

Burridge60

Unfortunately your assessment as a " laymen" should be how the FSA assess the situation.

If lip service is paid to this as much as it was to self cert mortgages then the mortgage industry will never be straight.

And we all thought that nudge nudge wink wink was a sketch from the 1970s

Wh05apk

Richards, I think the problem with direct lenders is that you spoke to a sales person, with targets, probably not earning much more than someone working in Mcdonalds, as such they will say what you want them to say, if it means they get a sale and hit their target.

Most responsible brokers who want to be around in a few years will be far more cautious, as they know if they are later checked by a lender and cannot supply any necessary evidence then the lender could strike them off their panel, fortunately most of us are not yet desperate enough to take chances like this!

SLAMMER_2

richards123 wrote: »

With regard to new mortgage applications, how many lenders actually ask for physical proof of repayment vehicles for interest only mortgages, does anyone know?

I'm reading that one lender asks checks out 1 in 20 interest only applications from brokers.

I also get the feeling that asking for evidence of repayment vehicles is more of a box ticking exercise as far as the lender is concerned ie covering their back and ensuring they 'are seen' to be lending responsibly..

In particular, how are RBS and the other high st banks in this regard and would the scrutiny be different between an online application and a branch based one?

Finally, does the LTV figure have a bearing ie someone wanting a 90% loan would be scrutinised far more than someone wanting a 30% loan?

Thanks:)

Ps apologies for the the grasping first post on the forum:o

its not a box ticking exercise its so the borrower knows that at the end of the term they have to pay the money back somehow or risk losing their home.

if the borrower doesn't have what they say in place then the bank will have every right to get the borrower to sell their property and there aint a thing the borrower can do about it. Quite rightly so as well.

kingstreet

Wh05apk wrote: »

Most responsible brokers who want to be around in a few years will be far more cautious, as they know if they are later checked by a lender and cannot supply any necessary evidence then the lender could strike them off their panel, fortunately most of us are not yet desperate enough to take chances like this!

Amen. No case is worth your career. Always gather more evidence than the lender requests and CYA at all times.

Leon_W

There are a couple of mortgage lenders about who will still take " sale of property " as the repayment vehicle, so there is no need for a token ISA or Endowment or whatever. Certain LTV limits apply though.

kingstreet

Leon_W wrote: »

There are a couple of mortgage lenders about who will still take " sale of property " as the repayment vehicle, so there is no need for a token ISA or Endowment or whatever. Certain LTV limits apply though.

Yep.

Was looking at this on another thread a couple of days ago. 85% with RV reduces to 75% with no RV with the likes of the Leeds BS.

https://forums.moneysavingexpert.com/discussion/3053504