Here we look at the reasons why lenders are finding it difficult to find affordable repayment plans.
Oh dear. Things seem far from happy when it comes to everything at home. The Bank of England said last week that lenders are planning to make it harder to get a mortgage in the coming months.
They also said that demand for mortgages fell to its lowest level on record between October and December last year – just as Covid completely shut down the housing market.
Let’s think about this. Demand for mortgages has fallen to an all-time low. There are? Is it true? What total tosh. Demand has not fallen – millions of people are desperate for a mortgage.
Millions are sinking under the weight of mortgage payments that have risen by hundreds of pounds a month overnight. Millions more are saving more than half their monthly salary just to rent a windowless box.
Of course they want a mortgage. They all want a mortgage. What do lenders mean everyone knows they can’t get a mortgage, so why bother applying? They say it’s all our fault because we’re not asking for loans we have no hope in hell of getting.
What’s going on?
It is about the lenders needing a profit to pay the shareholders. Offering mortgages that people can afford means they will lose.
Not offering mortgages is very bad – the owner will be in serious trouble if they do that. What do they do? Offer mortgages that no one wants. Bingo. The cheek is, by buying themselves well from the market of paying customers.
Duh. If you are a new customer, more of your monthly payments will end up in your lender’s pocket now than six months ago because there are four increase their profits.
You don’t get away with it if you’re a consumer too.
Let’s say your fixed rate has come to an end and you can’t find a new fixed rate that you can afford. What happens? You conflict with the standard rate of your loan.
If you made a two-year order at 1.99 percent in 2021 and this happens to you, your monthly mortgage is growing significantly.
NatWest’s SVR is currently 6.24 per cent, Santander’s is going up to 6.75 per cent on February 1, Halifax is 6.49 per cent, Barclays is 6.49 per cent and HSBC is charging 6.29 per cent.
What is the meaning of the increase
Monthly payment: £1,349
Increase the pcm: £502
Monthly payment: £1,349
Increase the pcm: £502
Monthly payment: £1,324
Increase the pcm: £477
All over the country
Monthly payment: £1,412
Increase the pcm: £565
Monthly payment: £1,318
Increase the pcm: £471
Monthly payment: £1,382
Increase the pcm: £535
The national SVR varies slightly depending on when you first took out your mortgage. Unless you’re on a lifetime mortgage that was taken before 2009, you’ll likely switch to a standard mortgage rate, set to rise to 6.99 percent on February 1.
For a £200,000 mortgage on a £250,000 house with 25 years left in time this is what it looks like.
In contrast, the cheapest two-year rate offered by Yorkshire Building Society at 4.7 per cent would mean monthly payments of £1,134 on the same mortgage. .
That deal is good if you can find it, but you have to pass the guide. If you apply through a broker, here are some restrictions.
- Age 60 or retire within ten years? You need proof that you will have a guaranteed income after you leave work. If you are relying on savings from a pension, you may find that you can borrow less than a final salary pension or annuity.
- You also have to pay off the loan in full by the time you are 80, which means you have to pay it back over 20 years instead of 25 which is the highest monthly payment.
- Remortgaging a new home and need a loan for 80% of the purchase price? Sorry, the maximum loan-to-value is 75 percent with a new construction home. You can get up to 85 percent on older homes, however.
- Do you live in a free apartment? You are not eligible. Studio flat? Sorry, no. Mayor of multi-storey block, bad no.
- Do you work on a no-hours contract? No, sorry.
- Missed a mortgage, credit card, loan or bill payment in the last two years? Maybe one on a mortgage or two on a credit card. I guess.
I am not picking up at Yorkshire Building Society. Anything but. In fact their policies are WAY more flexible than most lenders’ and they offer a very competitive rate. I love Yorkshire Building Society.
What I am doing, however, is revealing the harsh reality facing millions of homeowners right now.
I won’t lie, it sucks when you find yourself in this kind of situation.
That said, there is a silver lining. All of this means that lenders are cutting back on money as we prepare for a prolonged economic expansion.
In theory, mortgages will become more expensive. The truth is, if you talk to your lender before things go awry – even after they go awry – they will find a way to help you.
They may extend your time, make you interest-only, accept installments over an agreed-upon period – whatever, they won’t ask you in return. from the keys.
It may seem confusing, but their reluctance to lend to new businesses is so they can afford to help their customers when they are struggling.
Help is free and confidential
StepChange Debt Charity: 0800 138 1111
Payment Plan: 0800 280 2816
National Debline: 0808 808 4000
Citizen Advice: 0800 144 8848
Debt Advice Foundation: 0800 622 61 51
Turn2Us: 0808 802 2000