MSE News: Help for struggling mortgage borrowers urged

Former_MSE_Guy

"The Government should give struggling borrowers more help by keeping some temporary benefits in place, say lenders ..."

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Help for struggling mortgage borrowers urged

rtanswell

This story is good news, however in my recent experience, I find that many lenders are asking for the moon on a stick when it comes to getting a mortgage/remortgage these days.

Don't get me wrong, I understand the over-cautiousness of the banks after the big crash but they make the whole process extremely hard work these days!

I'm in the process of re-mortgaging through my usual broker as my 2 year fixed term has just ended and I also wanted to raise a few extra funds to cover the remaining costs of our impending wedding. I run my own Limited Company and have done for nearly 5 years and making a very good profit. Have NEVER defaulted on a mortgage payment or any sort of finance, I do have a couple of high credit card bills mainly because of the wedding which I plan to pay off when re-mortgaging. My adviser keyed on the wrong debt amounts for the first application and despite her begging them to accept it was her fault, they rejected my application as the figures of credit owed to them were incorrect, even though I gave my adviser the right info. So that is in a way understandable but a bit ridiculous because the error was admitted and was not made by the applicant (ie me).

Second lender was my bank. They rejected me because one of my credit cards is with them. I'm paying it off and reaching at least minimum payment and would be paying it off when remortgaging anyway! I have savings accounts with them so they are happy to take money of mine and make money with it but not happy to return the favour!

3rd lender looks better but they have been so finicky about data provided. I don't get paper bank statements and when printing them from the net for the business account, it doesn't show business name or my name, only account number and sort code. So I then had to print screen account summary and more info to prove it was my account! Even though payments made on the statement referenced my company name.

I've always had a really good credit report and recently checked it to make sure nothing had gone awry. It's still fine. I also have over £150k equity loan to value on my house.

I know things are slightly more tough these days but by simply remortgaging with a little extra funds, I'm going to be over £600 better off than I am now. If only the banks could see this! If I defaulted (which will never happen) and they had to reposess, there is more than enough equity in the property for them to recover their losses!

So in summary, all of these reports about helping borrowers etc is a load of tosh! We bailed out the banks and they are making it absolutely transparent that they are not going to return the favour by helping those of us with good credit to secure a re-mortgage when the risk to them is practically nothing!!

This country's economy growth will remain stagnant until the banks start to become a bit more willing to help the homeowners and small businesses who feed the economy a little more slack in such tight times!

harvey115

Its not just the Banks, the FSA is all over these banks to tighten up so they have to comply.

The government needs to understand this and the FSA needs to loosen up a bit on this regards. The Banks are just nervous with all the compensations and cases of suing Banks keeps emerging. The fault is in the Government!

rtanswell

I agree. But I also think the administration side of the banks are also very poor. They don't seem to know their backsides from their elbows. Asking for proof of company directorship etc. This is all stuff that is in the public domain and they can get hold of in an instant rather than keep toing and froing back to the applicants and delaying the application.

harvey115

The problem is the way people see Banks, in order to employ 'good staff' the employer needs to pay good money as well. However when this happens the public sector starts to show their anger and negativity on the Bank's pay system.

Although the Bank's have a responsibility to maintain these services, after all it will benefit them in terms of making more money. However I believe the biggest culprits in this whole Saga are the Government and the FSA. They are keeping their eyes shut and showing the general public that they are doing all that is necessary. The General Public is not educated enough in this sector to understand the impact because it is too hard to see and the media is not doing enough to bring these issues to front.

JimmyTheWig

rtanswell wrote: »

I find that many lenders are asking for the moon on a stick when it comes to getting a mortgage/remortgage these days.
...
I do have a couple of high credit card bills mainly because of the wedding which I plan to pay off when re-mortgaging.
...
We bailed out the banks and they are making it absolutely transparent that they are not going to return the favour by helping those of us with good credit to secure a re-mortgage when the risk to them is practically nothing!!

I think the issue is here that moving debt from unsecured to secured may be seen as irresponsible lending.
If you can't pay an unsecured debt then you get a black mark against your name. If you can't pay a secure debt then you lose your home. It's ina whole different league.

So maybe they are returning the favour by helping us (over-helping us, some would argue) by refusing to lend irresponsibly. They are probably doing so to cover their own backs, rather than for our own good, but the point remains the same.

Loopgames

harvey115 wrote: »

The problem is the way people see Banks, in order to employ 'good staff' the employer needs to pay good money as well. However when this happens the public sector starts to show their anger and negativity on the Bank's pay system.

Paying good front line staff is a whole different issue to paying directors millions of pounds in bonuses. Please try not to get the two mixed up

rtanswell

harvey115 wrote: »

The problem is the way people see Banks, in order to employ 'good staff' the employer needs to pay good money as well. However when this happens the public sector starts to show their anger and negativity on the Bank's pay system.

Although the Bank's have a responsibility to maintain these services, after all it will benefit them in terms of making more money. However I believe the biggest culprits in this whole Saga are the Government and the FSA. They are keeping their eyes shut and showing the general public that they are doing all that is necessary. The General Public is not educated enough in this sector to understand the impact because it is too hard to see and the media is not doing enough to bring these issues to front.

I'm sorry but this is a ridiculous statement. We have no objection to paying staff good money but do "good" staff lose so much money for their company that the taxpayer has to bail them out? Do "good" staff accept bonuses when they haven't really performed well enough to deserve them?

I think you have confused the words "good" and "greedy" here.

Every employee has to have a "value" to the company they are employed by. However, their personal "value" should not exceed their "value" to the company. In other words, an employee is an investment who should make a return for their investor.

rtanswell

JimmyTheWig wrote: »

I think the issue is here that moving debt from unsecured to secured may be seen as irresponsible lending.
If you can't pay an unsecured debt then you get a black mark against your name. If you can't pay a secure debt then you lose your home. It's ina whole different league.

So maybe they are returning the favour by helping us (over-helping us, some would argue) by refusing to lend irresponsibly. They are probably doing so to cover their own backs, rather than for our own good, but the point remains the same.

Surely it benefits only the lender to move unsecured debt to secured debt? For me, it means I can manage it better as monthly repayments are less. I'm not so blind to see that the interest I will pay, despite the interest rate appearing lower, will be significantly more as it's over a longer period of time! So the new lender, despite having to wait longer for the total to be paid off, will be making more money in terms of interest and have the security of knowing that they can reposess a property which is pretty much guaranteed to cover the cost of their lending. For me it's a no brainer.

Graham_Devon

rtanswell wrote: »

Surely it benefits only the lender to move unsecured debt to secured debt? For me, it means I can manage it better as monthly repayments are less. I'm not so blind to see that the interest I will pay, despite the interest rate appearing lower, will be significantly more as it's over a longer period of time! So the new lender, despite having to wait longer for the total to be paid off, will be making more money in terms of interest and have the security of knowing that they can reposess a property which is pretty much guaranteed to cover the cost of their lending. For me it's a no brainer.

They can't reposess properties very easy at the moment. This is what the initial story is partly about.

brit1234

Last December, the Government said the SMI payments system, which costs £400 million a year, is not sustainable and does not encourage people to get on top of their finances.

I agree. Schemes like this are just prolonging the downturn, we won't get recovery till things bottom out. I feel it is better to get the pain out quickly all in one go than let it drag out and catching more people.