MSE News: Help for struggling mortgage borrowers urged

grey_gym_sock

rtanswell wrote: »

Not in my case as I'm remortgaging from one lender to another as my current lender can offer me nothing decent now my fixed rate has ended. So surely this is new business for the new lender you'd think they'd be falling over you for. They're desperate for you to transfer CC balances, open savings accounts, offer insurance etc and will bite your arm off to try and sell you any of those. But when it comes to lending out some of their own precious money on a low risk basis, they make you jump through hoops!

a mortgage is lower risk lending, but also lower interest rates, i.e. lower reward for the lender. so it's not surprising that they're more cautious about it.

jamesd

beckythemadcow wrote: »

The government is helping irresponsible homeowners out to the detriment of those like myself who cannot get on the housing ladder.

And what of the responsible homeowners who if subject to repossession might find themselves receiving Housing Benefit instead? Or who may now have say 10% LTV and might end up with so much in savings after repossession that they would not be entitled to any benefits. If in middle age they may then find themselves unable to buy another place before retirement, having drained all of the money they paid for the home in living expenses.

beckythemadcow wrote: »

Not only that, but guess which poor sods are paying for others mortgages? The insanity - I can contribute to other peoples housing but the banks will not allow me any control over my own housing situation.:mad:

You're paying for the mortgage of your landlord, not the mortgage of those who aren't your landlord.

While I can understand your desire to have a cheaper place to buy, it's your own irresponsibility or inadequate savings or circumstances or choices that are preventing you from buying, not the actions of those who may receive SMI. You can buy a flat outright for £30,000 if you want it enough to accept what comes with that price, like location. If you don't want to make those choices blame yourself, not others. If you don't know about such prices, visit globrix, give any postcode and set the maximum price to 30k then zoom out to the whole UK. You'll find quite a few whole flats for £30,000 around the country and at least one for £25,000.

rtanswell

grey_gym_sock wrote: »

a mortgage is lower risk lending, but also lower interest rates, i.e. lower reward for the lender. so it's not surprising that they're more cautious about it.

In proportion the amount they make from a mortgage is much higher than a loan on a higher rate over say five years.

For example, I've been paying nearly £1100 on my mortgage on a fixed interest rate of 3.49% for 24 months. So I've paid in excess of £25k over 2 years. The actual amount it has knocked off my mortgage when given a settlement figure is about £10k. So my current lender has made over £15k out of me in 2 years. It's no wonder they don't want to keep you when you look at it that way! They've got away with making a fortune off of you for a couple of years, why extend the risk as the return reduces?

Bear in mind that was fixed at 3% more than the actual BoE interest rate which hasn't changed in 2 years. So they're making even more money than that when you think about it.

grey_gym_sock

well, it's not £15k profit. you have to deduct from that what it costs them to borrow money (which varies depending where they get it from), and their expenses, and (if looking at the whole picture, rather than 1 mortgage) what they lose on defaults.

mortgages can be more keenly priced if provided by building societies (since they don't need to make money to pay dividends to shareholders). a pity that most of them became banks in the 1990s.

Thrugelmir

rtanswell wrote: »

I also wanted to raise a few extra funds to cover the remaining costs of our impending wedding.

A house is no longer a cashpoint machine from which funds can be withdrawn. Precisely why retail banks (such as HBOS and Northern Rock) ended up in a complete mess. Lax easy lending. Socially irresponsible too. As mortgage funds should be allocated to those that wish to buy a home.

rtanswell

Thrugelmir wrote: »

A house is no longer a cashpoint machine from which funds can be withdrawn. Precisely why retail banks (such as HBOS and Northern Rock) ended up in a complete mess. Lax easy lending. Socially irresponsible too. As mortgage funds should be allocated to those that wish to buy a home.

I agree and disagree. I have worked very hard to pay off what I have on my mortgage in the past. Like everyone in these tough times, we would like to make our day to day finances a little more comfortable. There is a lot of equity in our house so why shouldn't we unlock a little of that for us to enjoy our wedding? It's our investment, we can't plough lots of extra money into savings because we don't have it floating about. It's not like we are poncing off of the tax payer. We are paying our taxes and probably supporting lots of others through that who are unable to work or chose not to. The banks are there to lend money, it's one of their functions and sources of income. Them lending money enables those who have it to save benefit from it. Otherwise money would just be stashed under people's matresses and the economy would be even more stagnant than it is now!

I don't use my mortgage as a cash machine. It's an investment, something for me to pass onto my children. In fact it's probably the best investment anybody can make. Borrowing a little back means that I just have to work harder/longer to actually pay it off. I have no problem with that at all.

Tiddlywinks

Help for borrowers???

When is someone going to help savers? Do we really have to keep propping everyone else up whilst our money loses value?

brit1234

jamesd wrote: »

While I can understand your desire to have a cheaper place to buy, it's your own irresponsibility or inadequate savings or circumstances or choices that are preventing you from buying, not the actions of those who may receive SMI. You can buy a flat outright for £30,000 if you want it enough to accept what comes with that price, like location. If you don't want to make those choices blame yourself, not others. If you don't know about such prices, visit globrix, give any postcode and set the maximum price to 30k then zoom out to the whole UK. You'll find quite a few whole flats for £30,000 around the country and at least one for £25,000.

No its a giant housing bubble created out of mass fraud, irresponsible lending and too low interest rates.

jamesd I suspect you like SMI and emergency interest rates of 0.5% because it protects your equity in your buy to lets. In the mean time prudent savers being robbed/tax payers who fund this suffer and are prevented on getting on the housing ladder because of high prices.

grey_gym_sock

so taxpayers should be happier to pay a larger amount in housing benefits for ppl who've had their homes repossessed, rather than a smaller amount in SMI to prevent it?

much, perhaps most, public spending only directly benefits a minority of the population. that doesn't mean it's all wrong. it should be about striking a balance. focusing on high house prices being bad for ppl who don't own them, to the exclusion of all other considerations, is as unbalanced as focusing on any other specific group.

beckythemadcow

grey_gym_sock wrote: »

so taxpayers should be happier to pay a larger amount in housing benefits for ppl who've had their homes repossessed, rather than a smaller amount in SMI to prevent it?

much, perhaps most, public spending only directly benefits a minority of the population. that doesn't mean it's all wrong. it should be about striking a balance. focusing on high house prices being bad for ppl who don't own them, to the exclusion of all other considerations, is as unbalanced as focusing on any other specific group.

If people sold their homes before they were repossessed, relying on a prudent emergency savings pot to cover the mortgage whilst that happened, there would be little need for housing benefit. I'm sorry I can't understand your second point...


FYI it is not due to my irresponsibility or inadequate savings that I cannot get a mortgage, it is the perceived risk as neither my husband nor myself have a permanent contract. I will not accept that that is our fault as we have both been educated to postgraduate levels and are competant in our own industries, but due to the economy it is very difficult to find permanent positions.

If prices weren't be artificially propped up, we could afford a property that we would be happy with outright.