A brokers perspective...MMR

makeitstop

amnblog wrote: »

If you (as the customer) check with a Lender and get a shortfall what do you do? Check with another Lender?

This is why I believe brokers should increasingly become the more dominant channel for mortgage applications.

Can you explain why it is that some lenders do not allow brokers access to their mortgage products, and, if that remains the case, what potential borrowers should do to ensure the best deals available for their circumstances.?

Let_Us_See

Who mentioned "huge?" Surely, any number is too many.

FireWyrm

ACG wrote: »

You originally said you can do it for £250. I was trying to work out whether you can or do as this may result in different underwriting.

Ok, potentially sloppy choice of words which led to the misunderstanding. I can and do feed a family of 5 for £250 a month. I can prove it because that is the amount of money I have to spend. I can tell you down to the penny how much I spent on meat last month if you wanted (for instance).

What I'm trying to get to the bottom of, is, what is the lending criteria. There must be some sort of universal calculation, or basic figures in order to design the algorithms in the first place? I assume there is some sort of computerised affordability tool, not just an advisor licking a finger and putting it in the air as to what they *think* you need to run a house?

ACG wrote: »

Im sure you can do it but at the end of the day there are averages for a reason and if you are failing affordability on a food bill i would say it probably was cutting it fine anyway.

I'm not actually failing the test...yet. I have another 3 years to run on my fixed rate, but no one seems to have a good idea what the nationally accepted criteria for affordability is exactly. Tell me someone thought this through?

As for cutting it fine, it depends what you classify as that. For instance, I have zero money spare next month. In fact, I have zero money spare in any given month. This is because I practice a form of budgeting that requires every single penny is accounted for. In reality, going by my net worth, I have several thousand available at any given moment in time, but it is allocated. I *could* if the SHTF, empty out the 'dental' pot and throw that money somewhere else because my teeth wont fall out if I dont see the dentist for a year, but if I do, then, we cannot attend the checkups that I have budgeted for. This is the point. All the money is allocated, but it can and absolutely would be moved around if, say, I lost my job (have insurance for that, but is another story). How do the MMR checks take account of this type of budgeting?

If they wanted, I could tell them where every single penny last year went....but I doubt any standardised checking process will have insertion fields that match my particular spending allocations.

So, the consumer has one of three choices

1) choose not to go through the hassle of remortgaging and stay on SVR - costly in the extreme.

2) Temporarily force their budget into one that looks more like Mr Average and whatever the computer model will accept as acknowledged spending patterns

3) Troll around trying to find a mortgage lender that will accept real world figures, that dont exactly fit the models.

If indeed, the mortgage brokers are aware of the MMR criteria per institution, is it the same for all and how on earth do they keep up with changes if each institution differs significantly.

FireWyrm

amnblog wrote: »

are you grooming me?

:rotfl::eek:

Heaven forbid.

marathonic

I suspect these long waits for appointments are something that will gradually fade as the banks get to grips with the new process and refine their underwriting criteria.

When the rules have been in place for a couple of quarters, I expect the 'going-solo' route to mortgage applications to take a little longer than what it took before, but not by much.

Also, at the end of the day, in most chains, there's going to be at least one person going it alone. Therefore, if I can secure a better rate by going with a lender that doesn't work through brokers or if I can avoid a brokers fee when I know that I'm a standard case and my desired borrrowings falls signficantly under the maximum the banks are willing to lend to me, then (as before), I see absolutely no need for a broker.

Personally, I'll be remortgaging to a 60% LTV product towards the end of this year and repayments represent 17% of my take-home pay. I have no intention of going the broker route.

Eviesmummy

amnblog wrote: »

RESPONSE TO EVIESMUMMY

yes, it's called section 6 of your key facts

Thank you, I'll check my paperwork.

makeitstop

Eviesmummy wrote: »

THIS is what worries me! Is there anyway to calculate what my payments will be at the end of my 2 yr fix if I'm not able to move another deal? I'm guessing that without a crystal ball able to say what interest rates will rise to there's no way ot work this out.

But surely that's always been the case with mortgages at the end of any fixed period.?

If any of us knew for certain what interest rates would be in two, three or any specific number of years into the future, we could make a fortune.

ACG

FireWyrm wrote: »

What I'm trying to get to the bottom of, is, what is the lending criteria. There must be some sort of universal calculation, or basic figures in order to design the algorithms in the first place? I assume there is some sort of computerised affordability tool, not just an advisor licking a finger and putting it in the air as to what they *think* you need to run a house?

If indeed, the mortgage brokers are aware of the MMR criteria per institution, is it the same for all and how on earth do they keep up with changes if each institution differs significantly.

I dont need to know how much you spent on your meat last month

No 2 lenders have the same calculation. Very few lenders make it public. What they do usually offer is an online calculator or the ability to discuss it with an underwriter/account manager beforehand.

Any broker who is making an application on a wing and a prayer should be castrated. We (should) always be as confident as can be that it is going to go through... its a waste of our time otherwise.

It is difficult keeping up with changes but we do it day in day out so it becomes part of the process. This is why (sorry to bang the broker drum here) brokers are important. You get people on here saying will i be accepted and you get basic information.

Non brokers on here will say "LENDER accepted me so you should be ok" but in reality that is a load of rubbish as no 2 peoples circumstances are the same.

Nothing has changed in that affordability gets assessed. It is still different from lender to lender, it always has been and always will be. The only thing that has changed is the rate they assess affordability on and what is included.

FireWyrm

ACG wrote:

I dont need to know how much you spent on your meat last month

Of course you dont, I would be very suprised if you did...I was just saying that the level of granularity is available. In reality, you would just need to know what I spent on 'food' but as someone pointed out, what about grooming? I dont do 'grooming' but in any standardised criteria collection, there is unlikely to be a set of input boxes which exactly match my spending patterns. This being the case, if you dont ask me, I dont tell you and wouldnt tell you for instance, that I budget money for 'glasses' which lowers my net worth (you would see the payment go out) but doesnt actually impact because I could and would stop paying that and pay something else if the SHTF. How is this taken account of? If the affordability calculations are set to ensure you can repay a mortgage at 7% (sensible), and I knock the glasses fund on the head, I could afford it, but if I didnt, I wouldnt etc. If you didnt ask me about the glasses, it would appear that I had more money available.

ACG wrote: »

The only thing that has changed is the rate they assess affordability on and what is included.

OK, so, what is that? Can you give some examples?

Leon_W

I just meant it in the way that there really isn't a problem Let Us See. I agree that repossession and arrears are obviously not a good situation to be in but where I disagree is that you do have to give borrowers some degree of responsibility.


If you wanted zero repos and arrears then nobody would be borrowing anything. There is always going to be a risk.


You can introduce as many rules and regulations as you like but arrears and repossessions will still happen. Despite the so called "reckless" lending it doesn't really follow through with the actual CML figures.


Going back a few years I was talking to one large lender and apparently the best part of their mortgage book were the loans made under 75%LTV with no income proof.