FTB's still struggling.

Graham_Devon

The titles obvious, but this article held within it a snippet of information I'd never known about before now...

Financial help from parents isn’t always enough. First-time buyers lent money for a deposit by their parents are routinely turned down by mortgage companies.

Many lenders, including Halifax, Northern Rock and Nationwide, have stopped offering mortgages to borrowers who have been given a loan by a member of their family to help put down a deposit on a home.

The extra debt, even from family members not asking for immediate repayment, can be seen as a black mark against a mortgage application. And borrowers tempted to call it a gift not a loan can still be caught out.

Lenders typically require relatives who have provided the cash gift to write a formal letter confirming the sum is a gift without reservation.

BUT, you can opt for a specialised deal, which is worse for everyone, apart from the banks. Deals such as family offset mortgages, mortgages whereby your parents or grandparents put their own home on the line etc etc.

This all points to further and more prolonger affordability issues to me, as most are very cautious about dragging their parents in deeper than they currently are with cash loans.

Seems to me the banks are covering themselves first and foremost for any falls in prices, hence neg equity.

www.thisismoney.co.uk/money/mortgageshome/article-2215251/First-time-buyers-struggle-despite-better-mortgages.html

ukcarper

If a family member lent someone thedeposit and the bank had to foreclose the bank would get their money first as it would be secured against the property the family member would be way down in the pecking order.

System

Looks like they are scraping the barrel for reasons not to lend to FTBers now.

Percy1983

Well lets be honest here, When I applied for my mortgage I had proof of many months budgeting to save, this must look better than somebody who has just been given the money.

Emy1501

lenders want to see FTB's can save their own money and therefore will be worth while credit risks.

There should be no reason why a couple cannot save up the 10% needed for a mortgage or most of it.

Lenders are not going to want to get involved in lending to FTB's who may also be trying to pay back the loan of the deposit at the same time they are paying the mortgage.

Graham_Devon

Emy1501 wrote: »

lenders want to see FTB's can save their own money and therefore will be worth while credit risks.

There should be no reason why a couple cannot save up the 10% needed for a mortgage or most of it.

Lenders are not going to want to get involved in lending to FTB's who may also be trying to pay back the loan of the deposit at the same time they are paying the mortgage.

Some would suggest this is absurd, as along with paying down other debts, they can show they can pay rent.

I don't really agree with that, but can see the common sense approach to it. The difference being that when you buy, the banks are taking some risk. When you rent, you don't need to "buy" that risk from a third party.

Banks are being cautious, and rightly so.

Gracchus_Babeuf

Graham_Devon wrote: »

The titles obvious, but this article held within it a snippet of information I'd never known about before now...

BUT, you can opt for a specialised deal, which is worse for everyone, apart from the banks. Deals such as family offset mortgages, mortgages whereby your parents or grandparents put their own home on the line etc etc.

This all points to further and more prolonger affordability issues to me, as most are very cautious about dragging their parents in deeper than they currently are with cash loans.

Seems to me the banks are covering themselves first and foremost for any falls in prices, hence neg equity.

www.thisismoney.co.uk/money/mortgageshome/article-2215251/First-time-buyers-struggle-despite-better-mortgages.html

So what? Don't volunteer unnecessary information. Simple as that.

Gracchus_Babeuf

Emy1501 wrote: »

lenders want to see FTB's can save their own money and therefore will be worth while credit risks.

There should be no reason why a couple cannot save up the 10% needed for a mortgage or most of it.

Lenders are not going to want to get involved in lending to FTB's who may also be trying to pay back the loan of the deposit at the same time they are paying the mortgage.

If you already have several years of track record with credit cards, bank loans, etc then that's all they should need. A check with Experian should be enough, they don't need to delve deep into the private financial affairs of borrowers. Of course if the first time buyers are spotty 21 year olds then it's a different ball game.

Percy1983

Gracchus_Babeuf wrote: »

If you already have several years of track record with credit cards, bank loans, etc then that's all they should need. A check with Experian should be enough, they don't need to delve deep into the private financial affairs of borrowers. Of course if the first time buyers are spotty 21 year olds then it's a different ball game.

All that proves is you can service current levels of debt/spending, doesn't prove you can fund extra (ie mortgage payments)

Gracchus_Babeuf

Percy1983 wrote: »

All that proves is you can service current levels of debt/spending, doesn't prove you can fund extra (ie mortgage payments)

That is assessed on your income. The trouble is that lenders are willing to lend 4x income these days which is much too risky. Not many years ago the maximum was 2.75x income. The current low interest rate won't last forever and then borrowers will find themselves in trouble.

Conrad

Europe and the FSA have been demanding more reserves which automatically implies less lending. What's not to understand here?

FTB's will struggle to get mortgages until such time as we decide the FSA has gone too far.