5% government mortgage guarantee

[Deleted User]

indigoblue11 said:

If you're on furlough, even flexible furlough no lender will touch you. My company doesn't need to furlough at all, they are very open in saying they are taking advantage of it while they can. Until they stop furlough, no 95% mortgage for me, and by the time it end, stamp duty and lack of 95% mortgages all back on the table.

Thats interesting but not true.  Lenders will accept furlough and flexi furlough. 

ukri

Deleted_User said:

indigoblue11 said:

If you're on furlough, even flexible furlough no lender will touch you. My company doesn't need to furlough at all, they are very open in saying they are taking advantage of it while they can. Until they stop furlough, no 95% mortgage for me, and by the time it end, stamp duty and lack of 95% mortgages all back on the table.

Thats interesting but not true.  Lenders will accept furlough and flexi furlough. 

Indeed they do.

indigoblue11

ukri said:

Deleted_User said:

indigoblue11 said:

If you're on furlough, even flexible furlough no lender will touch you. My company doesn't need to furlough at all, they are very open in saying they are taking advantage of it while they can. Until they stop furlough, no 95% mortgage for me, and by the time it end, stamp duty and lack of 95% mortgages all back on the table.

Thats interesting but not true.  Lenders will accept furlough and flexi furlough. 

Indeed they do.

Indeed they actually don't, no lender will lend on furlough because your company appears to be at risk. And could go either way, a lender will not hand over 100k plus with the risk that you might lose your job the month after! Exactly the same reason they pulled 95% mortgages off the market. 

Don't shoot the messenger I have been told this by 20 different lenders and 4 different brokers!

K_S

indigoblue11 said:

ukri said:

Deleted_User said:

indigoblue11 said:

If you're on furlough, even flexible furlough no lender will touch you. My company doesn't need to furlough at all, they are very open in saying they are taking advantage of it while they can. Until they stop furlough, no 95% mortgage for me, and by the time it end, stamp duty and lack of 95% mortgages all back on the table.

Thats interesting but not true.  Lenders will accept furlough and flexi furlough. 

Indeed they do.

Indeed they actually don't, no lender will lend on furlough because your company appears to be at risk. And could go either way, a lender will not hand over 100k plus with the risk that you might lose your job the month after! Exactly the same reason they pulled 95% mortgages off the market. 

Don't shoot the messenger I have been told this by 20 different lenders and 4 different brokers!

@indigoblue11 Just to be clear, not blaming you But there are lenders who will consider applicants currently on furlough.

That doesn't mean your circumstances on furlough will meet the criteria, but a blanket statement that no lender will lend to applicants on furlough is incorrect.

Some mass brokers may have taken the blanket business decision to not accept applicants on furlough due to the cost-benefit analysis which is fair enough. I had a client who was fobbed off by an online lender who said they need to be back at work from furlough, with a fresh payslip to get a mortgage but I was able to place them with a lender who considers furlough cases if they have a return to work date and their employer isn't lockdown impacted. 

It all depends on the specifics of the case and the particular circumstances, etc. 

indigoblue11

K_S said:

indigoblue11 said:

ukri said:

Deleted_User said:

indigoblue11 said:

If you're on furlough, even flexible furlough no lender will touch you. My company doesn't need to furlough at all, they are very open in saying they are taking advantage of it while they can. Until they stop furlough, no 95% mortgage for me, and by the time it end, stamp duty and lack of 95% mortgages all back on the table.

Thats interesting but not true.  Lenders will accept furlough and flexi furlough. 

Indeed they do.

Indeed they actually don't, no lender will lend on furlough because your company appears to be at risk. And could go either way, a lender will not hand over 100k plus with the risk that you might lose your job the month after! Exactly the same reason they pulled 95% mortgages off the market. 

Don't shoot the messenger I have been told this by 20 different lenders and 4 different brokers!

@indigoblue11 Just to be clear, not blaming you But there are lenders who will consider applicants currently on furlough.

That doesn't mean your circumstances on furlough will meet the criteria, but a blanket statement that no lender will lend to applicants on furlough is incorrect.

Some mass brokers may have taken the blanket business decision to not accept applicants on furlough due to the cost-benefit analysis which is fair enough. I had a client who was fobbed off by an online lender who said they need to be back at work from furlough, with a fresh payslip to get a mortgage but I was able to place them with a lender who considers furlough cases if they have a return to work date and their employer isn't lockdown impacted. 

It all depends on the specifics of the case and the particular circumstances, etc. 

Are you able to put me in touch with that lender because I’m stuck. My employer won’t tell us when they plan to end furlough, but it’s one day a week. And when I use holiday it’s not even furlough. So stuck with this. 

I need to get out of this place I live, there’s a cannabis issue in the flat oposite me and it’s really upsetting. 

K_S

indigoblue11 said:

K_S said:

indigoblue11 said:

ukri said:

Deleted_User said:

indigoblue11 said:

If you're on furlough, even flexible furlough no lender will touch you. My company doesn't need to furlough at all, they are very open in saying they are taking advantage of it while they can. Until they stop furlough, no 95% mortgage for me, and by the time it end, stamp duty and lack of 95% mortgages all back on the table.

Thats interesting but not true.  Lenders will accept furlough and flexi furlough. 

Indeed they do.

Indeed they actually don't, no lender will lend on furlough because your company appears to be at risk. And could go either way, a lender will not hand over 100k plus with the risk that you might lose your job the month after! Exactly the same reason they pulled 95% mortgages off the market. 

Don't shoot the messenger I have been told this by 20 different lenders and 4 different brokers!

@indigoblue11 Just to be clear, not blaming you But there are lenders who will consider applicants currently on furlough.

That doesn't mean your circumstances on furlough will meet the criteria, but a blanket statement that no lender will lend to applicants on furlough is incorrect.

Some mass brokers may have taken the blanket business decision to not accept applicants on furlough due to the cost-benefit analysis which is fair enough. I had a client who was fobbed off by an online lender who said they need to be back at work from furlough, with a fresh payslip to get a mortgage but I was able to place them with a lender who considers furlough cases if they have a return to work date and their employer isn't lockdown impacted. 

It all depends on the specifics of the case and the particular circumstances, etc. 

Are you able to put me in touch with that lender because I’m stuck. My employer won’t tell us when they plan to end furlough, but it’s one day a week. And when I use holiday it’s not even furlough. So stuck with this. 

I need to get out of this place I live, there’s a cannabis issue in the flat oposite me and it’s really upsetting. 

@indigoblue11 There's a long list of lenders who will consider applicants on furlough and each of them have their own criteria with regard to who they may accept and how much of the income will be assessed for affordablity. And each case will me manually assessed. So, to be clear, this doesn't mean that you will automatically qualify. If 4 different brokers have said that you can't borrow what you need in your current situation, that's likely to be the case.

Some of them are (accurate as of a few days ago) - Family, Barclays, TML, Vernon, Tipton, Metro, Ipswich, etc.

getmore4less

here is some more info

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/965665/210301_Budget_Supplementary_Doc_-_mortgage_guarantee_scheme.pdf

interesting wording(my bold).

The government will provide lenders with the option to purchase a guarantee on the top- slice of the mortgage. In other words, the government will compensate the mortgage lender for a portion of the net losses suffered in the event of repossession. The guarantee will apply down to 80 per cent of the purchase value of the guaranteed property.

Who will be paying? 

I recall way back lenders had their own scheme with an extra charge for high LTV borrowing to protect the lender.
what happened to those, I forget? 
was it mortgage indemnity premium or something like that.

The guarantee will be valid for up to seven years after the mortgage is originated, evidence shows that loans are unlikely to default after such a period has elapsed. Furthermore, a mortgage taken out on a repayment basis would normally have paid down sufficient capital after this time so that the borrower’s equity stake would be close to or greater than 20 per cent, meaning that the guarantee would effectively no longer offer any protection.

(before house price change)
I did some numbers for 5 years that suggested a 25year max term was doable to get down to 80% lending
With a 7y guarantee that will allow longer full term options up to 30 years where after 7 the debt will be 80% of purchase

Another section outlines the eligibility

[Deleted User]

@getmore4less you referring to Higher Lending Charges?   I remember them from back in the day but they had mostly gone when I started advising. 

getmore4less

Deleted_User said:

@getmore4less you referring to Higher Lending Charges?   I remember them from back in the day but they had mostly gone when I started advising. 

that's the ones, I go back a long way, did they get stopped or something as they were seen as a bit of a scam, you paid to protect the lender but were still liable for the debt.

I think one way to focus the minds of lenders on risk is that if they secure the debt that is the limit of liability for the borrower.
(I think some US states have that arrangement) 


On the new scheme I  forgot to add the lenders must offer a 5year fix as at least one option for this supported lending.

I wonder if Barclays(as they do one for regular lending) will do a 7 years special to align with the scheme.

There is scope here for a tiered rate product that drops as the LTV improves start out at 95% but say if you overpay and get to 85%/80% we knock a bit off.

be interesting what the rates look like when they come out compared to the current 90% offerings that are hovering around/over 3%
Also how are they going to pitch the fees  because one issue will be small deposit people won't have money to pay fees and adding to the loans could go over the 85%

Hopefully the brokers on here will be quick to post info as they get told what the lenders are offering 

Mahsroh

Deleted_User said:

@getmore4less you referring to Higher Lending Charges?   I remember them from back in the day but they had mostly gone when I started advising. 

When I bought my first house in 2008 (just before the crash!!) I had a 97% Mortgage (I was young and naive) and this included said higher lending charge which as stated above was essentially an insurance policy against exactly what the government are now guaranteeing. 

The big difference was, said Higher Lending Charge was passed onto me as the borrower, and added to the Mortgage amount effectively meaning my LTV wasn't 97%, it was actually 99%!

A year later my LTV was circa 110% - 115%, but that's another painful story!