Wednesday, February 15, 2012

Wait & see!

Thousands face interest-only mortgage crunch due to tough lending checks

The big attraction of these mortgages is that the monthly payments are cheaper than with a repayment loan. On a £150,000 mortgage at 5 per cent, monthly payments on interest-only would be £625, but £877 on full repayment.

Posted by happy mondays @ 09:02 AM (1775 views)
Please complete the required fields.



4 thoughts on “Wait & see!

  • “Many borrowers were relying on house price growth to pay off their home” – maybe but the lenders and Government of the day did little to curb this (and indeed encouraged it)

    As for people with existing deals they have a gunuine get out of jail card via the FSA’s own rules !

    Reply
    Please complete the required fields.



  • This whole industry was a result of artificially low interest rates and the legalization of fraudulent derivatives forming a bubble in the housing market. So at the end, what we need is an end to the Bank of England’s manipulation of interest rates and a return to proper accounting standards. The market would then naturally purge these idiotic “mortgages”.

    Reply
    Please complete the required fields.



  • To which the answer was…
    You don’t understand! The financial services industry is a major source of income for the UK.
    We are no longer a huge manufacturer and service industry is where employment should mainly come from.

    Reply
    Please complete the required fields.



  • This just in from Halifax

    Dear Jack,

    From Thursday 16th February, we are making changes to our acceptable list of interest only repayment vehicles.

    We are also making changes to the calculations used for the remaining repayment vehicles.

    Changes to acceptable list of repayment vehicles:

    The following changes are being made to all new Interest Only (including part Interest Only) Mortgage Applications and Further Advances.

    Cash Savings are no longer accepted as a repayment vehicle for any new Interest Only lending.
    Pensions must have a minimum current value greater than £1 million and up to 25% of the current fund value can be used to support Interest Only lending.
    All other repayment vehicles, or combinations of repayment vehicles, require a minimum current fund value of £50,000 of which up to 80% of the current fund value can be used to support Interest Only lending.
    This policy change does not apply to:

    Product Transfers
    Transfers of Mortgaged Property
    There is no change to the maximum LTV of 75% on Interest Only.

    Acceptable repayment vehicles and new calculations:

    Repayment
    Vehicle (RV) New calculation method of RV with effect from 16th February 2012
    Endowments UK Future value based on 6% growth rate.
    Stocks &
    Shares ISA UK Current fund value must be over £50,000 and up to 80% of the current fund value can be used.
    Unit Trusts/
    OEICs UK Current fund value must be over £50,000 and up to 80% of the current fund value can be used.
    Investment
    Bonds UK Current fund value must be over £50,000 and up to 80% of the current fund value can be used.
    Stocks &
    Shares UK Current fund value must be over £50,000 and up to 80% of the current fund value can be used.
    Pensions UK Current fund value must be over £1 million and up to 25% of current fund value can be used.
    Cash Savings UK No longer acceptable.
    Sale of other residential property UK Current equity must be over £50,000 and up to 80% of current equity can be used. The £50,000 minimum equity requirement must apply to each individual property being used to support interest only lending.

    Customers will be able to use a combination of our acceptable repayment vehicles above, or ‘mix and match’ the acceptable repayment vehicles to reach the minimum £50,000 acceptance criteria. The exception to this is for sale of other residential property which must have a current equity of over £50,000.

    Example 1

    Customer 1 has a £30,000 Stocks and Shares ISA and customer 2 has £30,000 Stocks and Shares. Combined this equals £60,000 and is therefore acceptable as a repayment vehicle. Using 80% of the current value, this is sufficient to cover £48,000 in Interest Only lending.

    Example 2

    Customer 1 has another residential property valued at £150,000 with a mortgage of £50,000. The current equity value is therefore £100,000 and using 80% of this is sufficient to cover £80,000 in Interest Only lending required for a mortgage application.

    Submission of applications

    In order to be accepted on the current criteria, Full Applications and Further Advances need to be submitted by 8pm on Wednesday 15th February – DIPs will not be accepted . Any applications submitted after this time will be treated using the new acceptable repayment vehicles and calculations.

    The Halifax Intermediaries Online System will be updated with these changes in due course.

    Our intermediary website will be updated by 9am on Thursday 16th February, including the removal of the Mortgage Interest Only Repayment Calculator.

    For more information visit halifax-intermediaries.co.uk or contact your Business Development Manager.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>