Over 50's will bit hit by new mortgage regulations

Graham_Devon

Older borrowers look set to be barred from taking a home loan as a result of a mortgage crackdown set to be unveiled tomorrow which will also include stricter terms for interest-only borrowers.

Millions of homeowners, including those trying to get on the housing ladder for the first time, will be hit when the City watchdog Financial Services Authority introduces the new set of rules for banks and building societies.

The crackdown is designed to prevent a repeat of the reckless lending which led to the financial crash. But it also has serious implications for the millions of homeowners with low-cost interest-only mortgages who have no plans on how to repay their debt.

The biggest losers will be people in their 50s because the regulator is expected to force lenders to make sure a mortgage can’t be handed out unless a homeowner will repay it before their 70th or 75th birthday.

And the official crackdown on interest-only mortgages will be confirmed, with lenders likely to be forced to check borrowers are keeping up with a plan to repay them.

Anticipation of this has already seen many banks and building societies stop offering interest-only loans and borrowers with them discover that if they want to move home or remortgage they must move to more expensive repayment deals.

http://www.thisismoney.co.uk/money/mortgageshome/article-2222296/Mortgage-overhaul-slash-loans-50s-young-hit-crackdown.html

This is all well and good...but I'm just wondering what product will be put in place by the government to get around someone losing their home as a response to this.

"Rebuy".

lemontart

read something about 25 yr morts will be difficult to get if over 50 - why on earth would you go for a 25 yr one, I have to remortgage due to endowment and took in to account that presently I will retire at 67 so only going for 15 max with aim to pay off sooner................defo do not want stress of mort after retirement.

ILW

lemontart wrote: »

read something about 25 yr morts will be difficult to get if over 50 - why on earth would you go for a 25 yr one, I have to remortgage due to endowment and took in to account that presently I will retire at 67 so only going for 15 max with aim to pay off sooner................defo do not want stress of mort after retirement.

Depends on your pension.

GeorgeHowell

This is only putting into regulation what has been the banks' policy ever since the credit crunch.

grizzly1911

Seems common sense to me.

No doubt those on IO who can't upgrade to one with some form of repayment will classed as in arrears and they will be managed as such.

Arguably if you haven't got a repayment plan then shouldn't be on a mortgage. Similarly if you want some form of deferred payment post a set point (retirement) then again it shouldn't be on mortgage terms.

Not saying that that those categories shouldn't be able to lent to but they should be done on commercial terms that reflect the risk, priced accordingly and stringently monitored.

It would also allow the Banks' mortgage books to be assessed properly by the regulators from a capital adequacy point of view.

Conrad

Canary here.

As I've been attempting to convince you guys, overly tight regulation is causing millions of folk to be cast into the arms of landlords as the FSA put mortgages out of reach.

This has to be the greatest financial injustice in UK history.

grizzly1911

Conrad wrote: »

Canary here.

As I've been attempting to convince you guys, overly tight regulation is causing millions of folk to be cast into the arms of landlords as the FSA put mortgages out of reach.

This has to be the greatest financial injustice in UK history.

Especially if you make aliving selling them;)

Conrad

lemontart wrote: »

read something about 25 yr morts will be difficult to get if over 50 - why on earth would you go for a 25 yr one, I have to remortgage due to endowment and took in to account that presently I will retire at 67 so only going for 15 max with aim to pay off sooner................defo do not want stress of mort after retirement.

As ever lemon, life is not always predictable and convienient.

I get many enquiries from older people recently divorced needing to buy out thier ex, or buy a new place as they are starting a new life.

More often than not they will now find a mortgage impossible.

Keep in mind in the past the vast majority managed perfectly well, for example they;

+ Kept on working into old age (but it's hard now to get an employer to comitt to this when say the applicant is say 59 now)

+ Downsized later on

+ Used interest only as it was affordable, knowing full well they were likely to get an inheritance

+ Met a new partner later on, so affordability no issue



What is happening now is that an out of touch middle class regulatory clique, just like that which was blissfuly unaware of the Saville scandal at the BEEB, are wreaking havoc on millions of perfectly sensible capable would be owners who can't quite tick every regulator box.


This is a massive transfer of wealth to the haves from the new have nots. It makes landlords rich - is this the price worth paying?

Conrad

grizzly1911 wrote: »

Especially if you make aliving selling them;)

Grizzly, people say this every time I mention this incredibly important subject.

Also don't worry about my living, now it's so hard to get a mortgage my fees are much higher.

I 100% promise you this is not about me.

You need to see the bigger picture where millions of people, 99% of which statistically would systain a mortgage, can now not tick every box and are thus forced to rent.

Do you think it's fair on all these people to have thier life chances curtailed by a nanny state? Keep in mind the very low proportion of repos.

Dunroamin

grizzly1911 wrote: »

Arguably if you haven't got a repayment plan then shouldn't be on a mortgage. Similarly if you want some form of deferred payment post a set point (retirement) then again it shouldn't be on mortgage terms.

.

I don't see why not, my parents had an IO mortgage which was repaid when the property was sold after my parents' death. There was no risk as you can't lose your pension income in the way you can lose your job.

Percy1983

Dunroamin wrote: »

I don't see why not, my parents had an IO mortgage which was repaid when the property was sold after my parents' death. There was no risk as you can't lose your pension income in the way you can lose your job.

This is all well and good, but what if houses prices decrease and there isn't enough to cover the mortgage? (yes I agree its unlikely, but there is a risk)