Issuu on Google+

Independent Mortgage Broker

Independent mortgage advice for those trapped and unable to move or sell their home It is estimated that over two million homeowners cannot move or sell their homes. Some of these are divorced couples who have no option than to continue to live on together. Others are growing families with young children, stuck in tiny flats bought at the height of the housing bubble. Others are too far from their family or employment. This position is one I have come across many times, as an independent mortgage broker. My instinct is always to help people and always to find solutions but there are approx. 2 million people trapped by the system. To me it doesn’t seem right or fair that these people do not have access to cheaper finance and are at the mercy of the banks. If the bank increases their variable rates there is nothing the borrower can do except pay more. Don’t forget it is likely they have lost a lot already on the value of the property so this is just adding salt to the wounds. It looks like these borrowers are paying for the FSA’s light touch regulation from the past where clearly they did not do their job properly and now they have gone so far the other way to make up for it and yet again it is the consumer paying for it.


Independent Mortgage Broker

Independent mortgage advice for those trapped and unable to move or sell their home Many are simply victims of the market situation. They negotiated well and got a decent discount off their new home, they did well to get this as house prices were rising at the time. But find themselves in negative equity now. These people have to work for a very long time to pay off the massive amount of negative equity that has built up and they can't move forwards until house prices have recovered, to either refinance or sell I again have to ask the question was the FSA responsible for their lack of regulation when the market was good. They should have known that Northern Rock lending at 120% of the value of the property was unsustainable let alone having self cert mortgages for the employed. Why would an employee need a self cert mortgage when they have pay slips? Halifax’s offer of help is very weak, by allowing them to go on to interest only, this will do them more harm in that their debt won’t be reducing and they will get used to having slightly more money but it does nothing to help them long term.


Independent Mortgage Broker

Independent mortgage advice for those trapped and unable to move or sell their home Also Halifax offer good rates for borrowers with good equity in their property but do nothing to help people in this situation. I expect many people would love to get a new low rate to help them out as this would make a real difference, instead of being stuck on a variable rate which the bank can and has increased at any time. This shows that too little is being done. Why can’t they have access to better rates as existing loyal customers? It is also very nice giving the borrower interest only payments or payment holidays but the bottom line is the debt still has to be paid so with a payment holiday the interest is added onto the mortgage thus making the problem worse. I agree with the general opinion that house prices will remain flat for a while longer, and in some areas may even drop further causing more people to be trapped. If the FSA is right and 45% of people can’t remortgage then we have a serious problem and they will be in the hands of the Gods waiting for house prices to rise before they can move and come out of negative equity. It may take several years for house prices to rise significantly.


Independent Mortgage Broker

Independent mortgage advice for those trapped and unable to move or sell their home It really would be sensible for the FSA to sit down with the lenders and work out what can be done to help this group of people because at present they are getting no help, have massive negative equity and are paying the most of their income on mortgage payments because they are stuck on high and increasing variable rates. The Lenders have pretty much stamped out interest only mortgages. I can see why this has been done especially whilst house prices are not rising, but also I can see a place for them in the market place. This is a question I would ask “Should a young borrower be allowed to get on to the housing ladder now paying interest only even if it is only for the first few years, whilst over time their income increases and therefore they can start to pay off the capital?" With credit issues it is important that banks lend on risk so if someone clearly has no respect for credit and always pay late I definitely agree that banks shouldn’t lend to them but life isn’t always this simple. The good news is that there are lenders out there who have sensible rates and are willing to lend to these people. To get everything moving we need to be lending across the board and not just to the people on high incomes with 40% equity in their homes or large deposits.


Independent Mortgage Broker

What mortgage can I afford? If you do find you are trapped don’t just hand back the keys as you are responsible for the debt, talk to a mortgage broker, talk to the bank, talk to the numerous charities and Government agencies that can help as there will be a solution. Richard Alton

If you would like advice on buy to let or residential mortgages, and whether you can afford the repayments based on the projected rental income, talk to me, Richard Alton at Alton Mortgages. I am a property investor myself and as I’m a whole of market independent mortgage broker, can help you find the best deal. Everyone is different, and every property is different, so it’s important to get the right advice.

Contact Me Tel : 01628 56082 eMail enquiries@altonmortgages.co.uk


Independent mortgage advice for those trapped and unable to move or sell their home