New mortgage affordability criteria - joke!

PaulMK17

The banks are using the new mortgage affordability criteria to screw customers. We have a £100,000 mortgage which we asked to increase to £150,000 but this wasn't possible due to the application of the new affordability criteria. However, it was suggested that we each apply for a £25,000 personal loan - which would give us the funds we required for our property expansion and renovation. What do you know - these applications were accepted! The catch - going down this route will cost us an additional £450 per month for the next five years!! This is clearly a nonsense and just the banks using the new rule as an excuse to make even more money out of hard pressed customers. So after 38 years as a Lloyds Bank customer I am now looking to switch banks to one that is more reasonable - if such a thing is possible.

Dan:_4

That is crazy!

PasturesNew

Once it's done you might be able to remortgage though ... right now all they have is a "promise I won't farq it up ... and it'll be better once I've finished". Once finished they'll be able to value what's occurred.

Funny_old_game

You don't fit criteria.

The loss if a bank account is worth less than an unaffordable secured mortgage agreement I'm afraid.

Unsecured lending is different to mortgage lending.

Other lenders are decking their bank customers who are shopping with their feet so swings and roundabouts.

ACG

Mortgages are more strictly regulated than loans.

Why did you not remortgage elsewhere rather than take out the loans?

Mortgage_Mark_2

In other news, I went to Tesco and they'd run out of eggs, but they sold me some bananas!

The !!!!!!s!

Just as relevant...

Leon_W

I do have sympathy for you Paul.


I see this all the time. No you can't put an extra £10k on your mortgage because it's unaffordable but please have a credit card or personal loan with no income checks at all, just sign here. It doesn't really make sense.


As ACG points out, it's all to do with the (over, imho) regulation of a market that wasn't particularly broken in the first place.


To my mind the whole system is completely the wrong way round. The most important thing is to keep the roof over your head, so mortgage first. If you then subsequently apply for a personal loan or credit, then full affordability checks should be applied to those in the same manner as they are applied to mortgages now. The level of indebtedness and risk of default is going to be exactly the same. Of course, this is wholly in the banks interest as the margins are much much higher.


However, as it is, you can run up thousands of pounds worth of credit and loan debt practically without any income checks at all but it all hits the fan when you apply for a mortgage as that is the only thing subject to such stringent underwriting.

Senior_Paper_Monitor

Press driven, politically motivated, badly designed legislation and policy guidelines with a complete misinterpretation/misuse by the lenders.


I get more demotivated by this industry every morning I get up.


About as well thought out as the dangerous dogs act - and implemented for the same reasons (the media) with the same lack of understanding of the actual problem.

TLM_77

What is 'the actual problem'?

I am not being sarcastic, genuinely interested to know your opinion.

ACG

He cant get a mortgage at a rate of between 2-4% but can get a loan with a rate of probably 6-9% with the same lender.

I think that is probably the issue.

In fairness, I dont think its the lenders fault - its more to do with the FCA but it doesnt matter when the problem arises its the impact it has on the customer and it goes completely against TCF (in my opinion).

TLM_77

That does seem to make a mockery of the system for mortgages.

How can someone be assessed as not being able to afford a mortgage of £150k, but then be approved to have a mortgage of £100k + £50k worth of loans, which, of course will be financially more expensive a month?

I realise that a mortgage loan and a bank loan are completely different entities but by refusing the more sensible and affordable one, the 'system' is potentially putting someone into hardship (I know it's the person taking the loans choice) to get where they want to be - which is completely at odds with what the new affordability checks were brought into to do.

I suspect we will see far more of this situation where people need cash for whatever reason, get declined a new mortgage of a higher amount, then get a large, expensive loan out, therefore increasing financial strain.

Surely the boffins that thought of the new affordability rules thought of this?

Still, ultimately, all down to the person wanting to borrow the cash I guess.

Good luck to OP with whatever you choose to do.