Lenders using the Corona Virus as an excuse not too lend. Its not right??

MDennis

Myself and my partner trying to buy our new lovely house together but after a long and stressful process of selling my property and turning my partner's property into a buy-to-let (to release funds for our deposit), we have already lost 1 mortgage and possibility of losing another. The lenders are blaming the Corona Virus and the uncertainty. They are even adjusting their lending rules to take into account Furlough pay. Furlough is a temporary measure to allow your employer to keep your job, it's not unemployment. After a couple of months, we should be back at work and earning our full pay again. Why are lenders using 80% of your income when this is only very temporary. It's not fair and making a very stressful situation even worse. 

RelievedSheff

Life is rarely fair. Put yourself in the lenders shoes. Would you be willing to lend money right now?

ACG

I do not disagree with your post.

But if the customer uses all their savings to buy the property, how do they afford the repayments? How do they afford them if/when furlough gets reduced? 

There are lenders who are using 100% of income, so sounds like your buyers just need to find a lender that suits them.

Also - your an adult. Life isnt fair. 

csgohan4

Life is unfair, but what is a certainty is what the lender can go on now, which is 80%, they cannot predict the future on what if's. The regulators would have a field day if they did, so say if I told the lender I would be earning 1.3x I would be in 1 year, so you can lend me more, they lend me more, I can't afford the repayment as I don't earn as much as I stated. Who's at fault? I'll give you a clue, the one who gave the money  

It used to happen, albeit in a different matter, self certification mortgages in the past. That did contribute to a house price recession as well

Thrugelmir

Rather than leverage up. Perhaps you should have either sold or lived in your partners partner. Furloughing is only a temporary solution. Tough decisions lie ahead for many employers no guarantees that your income will return to normal. Likewise there's no certainty that the tenant will be able to pay the rent. 

PixelPound

You assume that furlough is temporary and won't affect finances, i.e. everyone furloughed will simply go back into work after all this is over. That's a wrong assumption. There is no guarantee that all those furloughed will go back into work as if life was as it was before, in fact most likely it won't be the case. When lockdown is eased, there are a lot of variables as to what can happen. If social distance has to be maintained for quite a period then it may still effect a lot of companies, if consumers don't go back to spending, that will effect companies surviving, so we will find many who have been furloughed will end up unemployed. 

spoovy

Where did you get the idea that banks are obligated to lend you money?  

Windofchange

MDennis said:

Myself and my partner trying to buy our new lovely house together but after a long and stressful process of selling my property and turning my partner's property into a buy-to-let (to release funds for our deposit), we have already lost 1 mortgage and possibility of losing another. The lenders are blaming the Corona Virus and the uncertainty. They are even adjusting their lending rules to take into account Furlough pay. Furlough is a temporary measure to allow your employer to keep your job, it's not unemployment. After a couple of months, we should be back at work and earning our full pay again. Why are lenders using 80% of your income when this is only very temporary. It's not fair and making a very stressful situation even worse. 

You're complaining that things aren't fair because you have sold a house, turned another into a BTL, and now want to buy a further house to live in? I also rather disagree with your assumptions that the banks don't want to lend. How are they going to earn money if they don't? I think that lending will very quickly bounce back, but if I were lending a stranger half a million quid or whatever it is you are borrowing for your pied de Terre, then I'd probably do a bit of due diligence too.