Monday, March 16, 2009

Won’t see the likes of this again in our lifetime!

Borrowers offered 10 times salary

Since we are on the subject of the FSA proposal to limit mortgages to 3 times income - thought you'd like to see this article written two years ago. I especially like the bit where it says that a couple on average wages could borrow 245K!

Posted by sold my soul to the never never never @ 07:14 PM (1392 views)
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8 thoughts on “Won’t see the likes of this again in our lifetime!

  • little professor says:

    Traditionally, lenders would advance between three and 3.5 times single salary and 2.75 to three times joint income. However, it is now not uncommon to borrow four or five times income, and some lenders will go well beyond that.

    The reason for this increased generosity is that a growing number of mortgage providers now base their lending decisions on affordability. Rather than just lending a set amount based on a person’s salary, they take a more detailed look at their finances to work out how much they can afford to borrow.

    A couple on average earnings and with no children could borrow around £136,000 using standard income multiples. However, with an affordability model, they would probably get a mortgage for about £245,000.

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  • little professor says:

    The other option is to go for a self-certification mortgage. This is where you state your salary without having to prove it. The Mortgage Works uses a system whereby it asks people to declare their net disposable income.

    Matthew Wyles at TMW said: “We ask self-cert borrowers to work through their fixed expenses to come up with a figure that reflects exactly how much they have to service a debt.

    “In some instances, they may be able to borrow up to 10 times that amount, but it is based on net disposable income so is very different from gross salary. We think it is a responsible approach because we are encouraging people to think about how much they can actually afford to pay.”

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  • What about people who are planning to re-mortgage. They will be forced onto Standard Variable Rate by the regulator. They MUST be given a lifeline and be given opportunity to have a fix for the period between now and when their mortgage would be paid off to 3x salary. This is awful for many. Some even with 4xsalary will be screwed. But, a cunning scheme if you, as government wanted to own all the houses.

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  • “they take a more detailed look at their finances ”

    ho ho.

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  • Yes this links in well with the previous article re: returning to 3x etc.

    Well done LP on the photos.

    Couldn’t they just keep this system in place for me, so I can get my castle when all you other peasants will have to make do with family homes !

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  • As a man once said, it works better in theory than in practice!

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  • Justanotherftb says:

    Man, this just reinforces how monumentally *stupid* all those greedy, rotten *bankers* were/are!

    Debt is the new slavery.

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