[Pent Up]

Stumbled across this on mse. A sudden mortgage tightening? I wonder what it refers to and if there's is any substance behind it.

http://forums.moneys...d.php?t=3819521

Quote

Hi all,

My plan is/was to sell my flat, pay off my outstanding debts and move home - effectively starting again as my mortgage would be 25 years again. I accepted an offer on my flat at the end of January and as I had been given a Decision in Principle from the Halifax, began to look for properties to move to. I found one and contacted my (independent) mortgage advisor to confirm the mortgage offer, only to be told that 'the criteria has changed and they are no longer willing to lend me the amount stated in the Decision in Principle letter', despite the DiP being valid until 16 March 2012 and nothing having changed in my circumstances. According to my mortgage advisor, some changes in the financial sector have 'sent all lenders into a panic, and none of them are willing to lend'.

When the DiP was agreed, it was done so on a 90% LTV (the LTV is not detailed on the letter, only the maximum amount). The mortgage advisor now says that Halifax now want a 15% deposit instead of the 10% agreed previously (so now it's 85% LTV). With the deposit I have, after paying off my debts, this would effectively mean looking at a property with a purchase price at 70% of what had originally been agreed - not possible, unless I buy practically the same sized property in the same area I am in now, and there is little point in that. I will be speaking to another advisor to see if they are able to locate an appropriate deal for me, alternatively I will have to wait until I have sold my property and paid off my debts before applying again - even then if the lenders are not exceeding 85% LTV I am stuffed!

How is it that they can provide a Decision in Principle in which they state "Provided you meet the conditions of this Decision in Principle, we will be able to make you a full mortgage offer if you make a full mortgage application before 16 March 2012.", and then they can just rescind on it just like that?! It's not worth the paper it's written on! My circumstances have not changed, I was completely honest about my debts which I will be paying off on selling my property, and my salary and employment details have not changed.

I am about to write them a letter expressing my disappointment and amazement that they can and have done this. Can anyone suggest a way forward for me please.

Many thanks in advance.

[Monkey]

the only problem i see is that the OP on MSE can not distinguish between "in principal" and 100% confirmed

the bank can do what they want, its in the small print.

people are slowly realising that we are actually at the mercy of the banks more so than people thought

[The Masked Tulip]

Sounds to me as if the penny is finally dropping with some in the property game that the banks either do not wish to lend or do not have the cash to lend.

Sounds like some of the criteria banks have for lending or the new rules about how much reserves banks must keep - which everyone on this site has known about for a year or more - is finally getting through to the mortgage 'professionals'?

[Sine270]

Recently looked for a mortgage and had no trouble at all. Easy to get about 5 X income on a 60/70% LTV. Also, forget using a mortgage advisor. Go direct. It seems you can get a better deal. But yes, some have tightened up and HSBC are ultra conservative now at 3.5 X income even at a 60% LTV

[cybernoid]

"some changes in the financial sector have 'sent all lenders into a panic, and none of them are willing to lend'."

The brokers getting all excited that something has actually happened in this exciting career he chose. Can you imagine doing that all day every day! Just a bit of exaggeration to make his tedious job sound interesting, assuming that quote is accurate.

It's just lenders tightening up, finally. A bit. It's nice to hear it's happening out there, but we're still a long way from sensible responsible lending, it will take time.

As for the guy, well tough, they don't have to hand over piles of money just because they said they might in a letter. Maybe the rest of us don't want to bail the likes of him out again because he can't add up?

[EmpiricalBear]

Sine270, on 27 February 2012 - 10:01 PM, said:

Recently looked for a mortgage and had no trouble at all. Easy to get about 5 X income on a 60/70% LTV. Also, forget using a mortgage advisor. Go direct. It seems you can get a better deal. But yes, some have tightened up and HSBC are ultra conservative now at 3.5 X income even at a 60% LTV

Being self-employed I didn't find it easy at all. Yes. you are right 60-70% LTV is relatively easy for those of us lucky to have a nice chunk of existing capital, doesn't help most first time buyers though. Where I feel short was that I hadn't paid myself enough in the past, so despite having good income potential and high savings/no debts no one wanted to lend to me, even with a 70% LTV.

In the end I used a mortgage advisor and that solved the problem. She earned her money, it took over a month to get a positive decision from the building society.

[leicestersq]

10% deposit seems like a risky bet to me. Even 15% is pushing it a bit.

Perhaps the authorities are forcing high ltv mortgages to take a much lower mark on their books.

[Sine270]

EmpiricalBear, on 27 February 2012 - 10:22 PM, said:

Being self-employed I didn't find it easy at all. Yes. you are right 60-70% LTV is relatively easy for those of us lucky to have a nice chunk of existing capital, doesn't help most first time buyers though. Where I feel short was that I hadn't paid myself enough in the past, so despite having good income potential and high savings/no debts no one wanted to lend to me, even with a 70% LTV.

In the end I used a mortgage advisor and that solved the problem. She earned her money, it took over a month to get a positive decision from the building society.

Also self employed and had the same problem that I hadn't paid myself enough over the past few years to get the best mortgage deal which was HSBC. I had all my accounts in order though so no worries there. Nat West offered me 2 years at 1.95% above base rate and 5X average earnings over past 2 years. The brokers I saw could not match that deal.
I assume you had to go through a broker for some sort of self cert deal?
My income potential has also increased lately but lende are only interested in what it says in you tax returns.

[cheeznbreed]

MSE said:

I'm using £32k out of the equity of the sale of my property to pay off my debts.

Another pwoperdee money creation miracle about to be unmasked to a devotee of the faith. The congregation is about to drop by one.

This post has been edited by cheeznbreed: 27 February 2012 - 10:50 PM

[Soon Not a Chain Retailer]

EmpiricalBear, on 27 February 2012 - 10:22 PM, said:

Being self-employed I didn't find it easy at all. Yes. you are right 60-70% LTV is relatively easy for those of us lucky to have a nice chunk of existing capital, doesn't help most first time buyers though. Where I feel short was that I hadn't paid myself enough in the past, so despite having good income potential and high savings/no debts no one wanted to lend to me, even with a 70% LTV.

In the end I used a mortgage advisor and that solved the problem. She earned her money, it took over a month to get a positive decision from the building society.

This is the problem for self-employed folk who, through choice, either don't take as much as they could out of the business or minimise profits shown on account for taxation purposes.

Self-certs were introduced to assist the self-employed. Unfortunately, we all know the rest of the story, they were exploited by mortgage advisers after fat fees to allow PAYE salaried workers to take out much larger mortgages than they could really afford.

________

I don't think the pinch-point of banks wanting larger deposits and people thinking 'I can't be ar5ed to save for it to be eroded by inflation so quickly'.

I think the BOMAD has been keeping it going this long but, it would be interesting to know how many cases there are of two generations of the same family being utterly reliant on ultra-low interest rates.

[Soon Not a Chain Retailer]

Sine270, on 27 February 2012 - 10:46 PM, said:

Also self employed and had the same problem that I hadn't paid myself enough over the past few years to get the best mortgage deal which was HSBC. I had all my accounts in order though so no worries there. Nat West offered me 2 years at 1.95% above base rate and 5X average earnings over past 2 years. The brokers I saw could not match that deal.
I assume you had to go through a broker for some sort of self cert deal?
My income potential has also increased lately but lende are only interested in what it says in you tax returns.

I bet, as far as self-employed tradespeople go paying lots of tax isn't necessarily as likely to mean the loan won't be defaulted on as the bank might think - insofar as they won't have the off books funds to draw on, if they become financially distressed, that others will.

[bewildered_renter]

cheeznbreed, on 27 February 2012 - 10:48 PM, said:

Another pwoperdee money creation miracle about to be unmasked to a devotee of the faith. The congregation is about to drop by one.

And isn't the most amusing thing that the MSE user calls himself "Debt Alchemist"

[Bloo Loo]

Sine270, on 27 February 2012 - 10:01 PM, said:

Recently looked for a mortgage and had no trouble at all. Easy to get about 5 X income on a 60/70% LTV. Also, forget using a mortgage advisor. Go direct. It seems you can get a better deal. But yes, some have tightened up and HSBC are ultra conservative now at 3.5 X income even at a 60% LTV

odd, the MSE post also looked for a mortgage and got one easily...until it was time to hand over the cash.

[ader]

If the banks want a 15% deposit it's clear they think prices will drop that far. They want you to risk your deposit and they don't want to risk what they lend.

[council dweller]

Something to do with Europe?