Have your say on rent as evidence that people can meet mortgage repayments

Thrugelmir

Lysimache wrote: »

More consistently and more openness in how income is calculated and viewed by different providers would help open up more of the market to such people.

Lending is a business. Like supermarkets. Finance houses target different mortgage market segments. Mortgages aren't like selling cans of baked beans. Volume isn't the name of the game.

Sambella

I like this idea of taking rent into account for mortgage affordability so long as it is done sensibly.

kingstreet

Sambella wrote: »

I like this idea of taking rent into account for mortgage affordability so long as it is done sensibly.

Are you going to link the words 'sensible' and 'this Government?'

:eek:

getmore4less

Another tool for sensible lending is limit the liability of the borrower to the asset securing the loan.

Although that would probably restrict lending rather than open it up which is the goal.

on another note there could be room for lenders to be more flexible on deposit/rates.

There are those that are income rich but cash/deposit poor, current schemes are all external help there are none where the borrower can use Their own income to support a better deal

The idea is something like you get 2 years to improve the equity by bigger payments

The bigger the commitment the better the rate you get

A typical payment for 2 years will get around 5% off the debt if you commit to say 10% with a bigger payment you get the next rate down

eg. if you start at 95% LTV and commit to getting to 85% LTV you can have the 90% rate

For longer fixes you could introduces some interets rate stepping if you hit the targets with overpayments

UKParliament

Hi Everyone,

There is just over a week left to share your thoughts on this.

Thanks!

Mrpear

As a youngster, I was taught when I first moved into my rented house that you must never miss a payment on your rent and your council tax.

I didn’t really understand a credit report or score and saw those two bills as my absolute priority.

To the point that at 20, I defaulted on credit cards, mobile phones and other less bills just to keep the rent and council happy.

Thankfully now, as you get older you learn more!

But my current rent (since 2015) is £1,900, and has never been missed by a day.

I’m in the process of a mortgage application at 85% LTV and jumping through hoops for a mortgage that will be £1,200.

From my experience, the lender we are using has already asked for evidence of paid rent on time. So I don’t see how this isn’t already taken into consideration?

NineDeuce

I am 100% an advocate of saying that rent payments are evidence of mortgage payment affordability.

I think that banks should use this to lend the full amount of money for a property price and not require huge deposits.

Without this, too much power is with estate agents, property moguls and buy to letters.

It is ludicrous that a tenant is effectively asked to show that they can, for example, pay £900 pm (i.e. £650 rent, £250 deposit savings) for years on end to pay a £750pm mortgage payment, when a buy to letter just needs to get a tenant in to pay off his mortgage for him.

The housing system will always be completely broken until just about everybody has a realisitic chance of buying a home...

glosoli

NineDeuce wrote: »

I think that banks should use this to lend the full amount of money for a property price and not require huge deposits.

All fine and well if house prices are rising, but if theres a fall?

VintageHistorian

I agree with the petition. For quite a lot of people the cost of mortgage payments on a house will be less than the rent they would pay on a similar sized property. For example my mortgage payments are £666 a month for a three bedroom terraced house in a corner of Essex. A quick look on Rightmove tells me that a house round the corner, 2 bedroom terraced, is going for £800 a month. A 1 bedroom end of terrace two streets away is listed for £595 a month. Bills are not included in either of these.

If someone has consistently managed to meet these payments and similar, year on year, then why would they suddenly not do so for a mortgage?

Of course people will say that you need to remember that you're then responsible for arranging repairs on your own home. But when you're renting a well-informed landlord will be setting aside part of your monthly rent payment to cover emergency costs anyway. They can even claim back some of your deposit at the end for repairs and the like (and a quick look at some of the threads in this forum will tell you just how many people are still unaware of their rights regarding deposit deductions).

What else should banks do?
With so many people in temporary contracts I think more needs to be done to encourage lenders to take in to account people who aren't in a stereotypical permanent job. We had trouble getting a mortgage because I'm on a 2 year contract with one of the largest educational establishments in the country. In the end Halifax offered us a mortgage because my previous job had been a permanent contract in a similar role (I moved as I was offered a larger wage and a step up the career ladder). I've since had my contract extended by another year and received a further promotion, my temporary contract is simply the nature of my employer rather than a negative reflection on my dedication to my role.

Nationwide wouldn't give us the time of day, NatWest would lend but at a higher interest rate. A look at the Barclays website at the time wasn't favourable, I'm not sure about other banks.

Should government interfere?
I fear that there is going to be a significant increase in the number of people in self-employed work or temporary contract work in the coming decade. If the government is unwilling to do anything about people being forced down this path then they need to make sure that the things those people need, safe housing being a key one, is still available to them. I'm a little wary of the word "interfere", but certainly I think that the government needs to be investigating ways to ensure that people with incomes within affordability limits but not necessarily "stable" jobs can still buy a house.

The big risk is that these people are going to hit 70 with no home in their name (because they had to spend their lives renting), no pension provided by their workplace (because they didn't have a workplace), very few savings (because of the aforementioned higher rents) and nowhere to turn to except the government. Good luck with that.

NineDeuce

glosoli wrote: »

All fine and well if house prices are rising, but if theres a fall?

Any falls will not represent massive differences to many people trying to get on the housing market. Certainly nobody is going to be as lucky as previous generations...