Official. No more Liar loans. Celf cert banned.

RenovationMan

lostinrates wrote: »

perhaps that's part of the benefit for the country....making ''dodges'' less atractive? I think conrad has said in the past (and a paraphrase!) many of his clients are rolling in it but not on paper...perhaps the idea is to force people's hand to make a choice here to live more humbly in the short term on hat they declare or to declare more thoroughly.

The issue isn't about avoidance of tax, it's about having to prove years worth of profitability before a bank will lend you a mortgage. A PAYE employee with a one month notice period only needs to supply 1 pay slip (seemingly) to prove his income and could lose that job the day after he moves into his new house.

There has to be consistency. They should have said that all mortgage recipients should have 3 years worth of financial accounts to prove that they are a viable risk. I wonder how many PAYE employees would struggle with that?

Buy_It_Now

geneer wrote: »

Conrad, you may be alright, and you may just get bovine drolling monkets who will accept your every word on the state of the housing market.

But I suspect they simply won't get through the checks anymore.

If you every want to earn any more comission, you really don't want those sensible potential buyers to feel like your as honest and knowledgable as a used car salesman.

Just wanted to quote you, no.2 :T

RenovationMan

Buy_It_Now wrote: »

Just wanted to quote you :T

What on earth is a "bovine drolling monkets"?

I often think the level of some of geneers posts points towards a call centre drone firing off posts ASAP before his supervisor looks over his shoulder. RBS have a call centre in Edinburgh, do they not?

The_White_Horse

surely all of this is bad for the IFA/mortgage broker? i can easily get a mortgage for 3x or 3.5x salary by going to any high street lender. I want the IFA/mortgage broker to get me more, more than i could possibly dream of getting under my own steam. if they can only get me what I can get myself, what is the point of them?

wotsthat

RenovationMan wrote: »

What on earth is a "bovine drolling monkets"?

It's a special code to let everyone know that he won't be refuting Conrad's claims with anything that looks like supporting evidence.

Conrad

geneer wrote: »

If you every want to earn any more comission, you really don't want those sensible potential buyers to feel like your as honest and knowledgable as a used car salesman.

Again, can you prove our mortgage market is anything other than ordered?

Please include reference to repossession trends over the last 20 years.

shortchanged_2

Conrad wrote: »

Arrears levels on self cert mortgages are lower than on standard mortgages.

You need to understand that many many folk have genuine reasons to self cert, although some of course are iffy.

EXAMPLE, a fireman;

Most firemen I've dealt with run a second job on thier 3 - 4 days off per week.
This is typically self employed.

Lenders will lend c3.5 x the fire sevrice income, but only allow 1 x the second income, but this is illogical, the guy can perfectly well sustain a loan equating to 3.5 x TOTAL income. The fireman has often had his second income as long as the first and it is perfectly sustainable.

It's reasons like this that many people simply do not fit the mould BUT IT DOES NOT MEAN THE LOAN IS UNAFFORDABLE.

I'm not actually referring to these sorts of cases, I was referring to the so called liar loans where people were actively encouraged to LIE about their income to obtain a larger mortgage because the lender didn't actually check for any proof of income.

The_White_Horse

i think it should be done on repayments. each person (or couple) should go through and independent process which shows what they can afford each month to repay. if that comes up at £600 then they should get a certificate for this sum. they can then take that certificate to all the lenders and the lenders can offer whatever loan they like, knowing they will only ever get £600 a month. So one may say "I will offer 5.7% over 30 years" and someone else may offer 6.0% over 36 years". Obviously this will depend on their own criteria ie age of applicant etc.

It is so simple. It is flawless.

Graham_Devon

Conrad wrote: »

I think that's a fair summation.

I meet lender reps and they tell me thier self cert books are the best performing parts of thier portfolio, and the reason behind this is that most self certs required large deposits which people don't give away lightly (repo leads to the deposit equity being swallowed).

I think self cert is a factor, just not quite as big as the interest only route.

Put it this way. In 2004,5,6,7, you had a choice.

House prices were rising. Say you wanted a house at £140,000, but a budget of £500 a month.

That £500 per month would not buy you that house on a repayment basis. However, with interest only, you'd have change left. At a 4% interest rate, the difference was £280 a month.

So that £500 in say 2006 allowed you a £140,000 mortgage.

Today, at 5%, your very same budget of £500 a month is restricted to only being able to borrow £85,000.

Thats a massive difference. Interest only gave you another £55,000 of affordability. I believe more than 50% were choosing the interest only route...and it's no real surprise, given how much more you could get for the same monthly budget.

The self cert removal will have an effect, but the above effect will be far larger...as can be seen today.

Let's not forget, you could get interest only at 100% too. And whats more, interest only at 100% and a personal loan for 25%.

People are kidding themselves if they don't believe these proposals will have an effect. Joe Bloggs above has just seen £55,000 wiped off his affordability. That's a 3rd of the total cost of the house! May take some time to trickle through to prices, but it will certainly effect transactions...and people need to move, especially those already stuck on interest only mortgages, with no way of paying the loan off, and a reducing house value. It's ok saying they can take their product with them....but they need to find someone who has got funding to take the house off them in the first place.

StevieJ

Instead of banning Self Cert all they needed to do was make it known that HMCE will be requesting a copy of all SC declarations