Completely agree with Emma; the budgeting discipline over the normal course of five years would seem to be a great test for mortgage lenders to take into account.
I agree with David that doing an IVA rather than going bankrupt "should" stand you in good stead but I differ from David's opinion about whether that will actually be the case in the near future.
When you speak to the decision-makers in mortgage lenders (in the current climate) their concern is the sentiment of their funders and quite frankly funders do not understand or seek to understand the subtle but significant differences between people who have done their best to repay unaffordable debts via an IVA and those who have chosen (for the right reason for them) to move forwards from the problem via bankruptcy.
In my limited opinion mortgages for those who have been through debt troubles of any sort are going to be the last area of the mortgage market to recover on what looks like a long road for everyone.
This isn't written with the intention to depress or sadden readers in any way; it's an honest personal opinion on the UK mortgage market's future that readers will decide to factor into their future planning or not depending on their own view.
Andrew Graveson
Bright Oak Ltd
UK Debt Management Company
Website: www.brightoak.co.uk
Interesting perspective Andrew. I disagree. Mortgage lenders(once they become available) are there to lend money and their criteria will always be the value of the property and ability to re-pay. What will change is that an initial higher deposit will be required and possibly the multiple of salary to mortgage ratio - as in the past. Non-status mortgages will come back and the economy will start to grow. All of this will take time - my guess is between 9 months and 2 years.
The culture in this country of bankruptcy lite and the ability to pay back what you can afford will be matched with more careful lending decisions by lenders who will undoubtedly become more responsible in what they offer - and to who.
Mortgage lenders are in business to lend and as soon as liquidity in this market is restored you will see movement going forward to all applicants.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
Presumably Andrew's personal opinion is also backed by the fact that his is a qualified and experienced mortgage broker, with detailed knowledge of that particular market.
My personal opinion is that banks ought to consider lending to parties with previous financial difficulties, however it is clear that no-one is leading the way at present.
Would be interesting to see if Tony Parsons has any predictions.
In my opinion the lenders should be doing a lot more for those with credit problems or those that have had financial difficulties.
The sub-prime or adverse call it what you like is very lucrative to the lenders and it will only take one of them to be brave enough to offer available products and a lot will follow.
The current problems are caused by decision makers within the finance industry who see nothing more than bottom line and bonuses, in fact I was amazed whilst watching the bankers squirm their way through the questions the MP`s were putting to them that none or very few of them have any banking qualifications! Isn`t that like allowing someone to fly a jumbo jet just because he could drive a milk float, it doesn`t make sense.
I posted here 2 years ago or more that there was going to be a problem with N.Rock and the negative equity secured loans and it strikes me as strange that the decision makers seemed to be ignorant of the fact that their business model was a ticking time bomb.
There are obvious difficulties obtaining mortgage finance at present and an awful lot of that is down to the fact that lenders don`t have monies to lend. It will right itself, when I don`t know but there are still deals available to those with IVA or BR on their credit file.
It will always be the case that those who need help i.e. lower rates and better availability of products can`t get it and those who don`t need it can have what they want.
Picking up on Andrew`s point I think this area of the market will probably be one of the last to recover but on a positive note I am sure someone will be bold enough to lend and start things moving again.
Melanie is right that lenders should consider lending to those with previous financial difficulties and I would also like to add to the initial poster not to lose heart, there are deals available but the critical thing will be loan to value lending.
It saddens me that good people have lost out for the sake of the mis-management of others.
Tony
F.P.C. 1,2,3 Qualified
Financial Planning Certificate
CeMap Qualified
Whole of Market Mortgage Broker
Managing Director : Debt Advisory Bureau
Debt Advisory 4U
Principal : All Mortgage Products
Good post Tony and glad you agree with my sentiments overaul that the lending will happen again at some stage.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
At the moment the banks dont seem to be working to any logic. Let me explain. As some of you may be aware I did a F&F IVA in August 2007 it completed 1 year ago today. Last year we switched banks accounts to the Abbey as we were advised that they would be our best bet for getting a re mortgage. My wife left her old account with HSBC open but only with a fairly small amount of money in it. Now despite having quite a large amount of money in the Abbey account they have a new policy of not giving anyone who has had a IVA/BK a mortgage however they have approved us with out asking us for a bank overdraft a credit card and a loan if we wanted them (not that we do). So with Abbey we are good enough for a loan and CC but not a mortgage. Now the other end of the scale my wifes old bank (HSBC) which has not used for some time looks like they are giving us a mortgage (just waiting for the offer in writing). Now she has had the account for a long time but they have not seen any use in it for about 9 months. It looks like we will get the mortgage with them with out any problems. (I hope). So there is no logic in any banks reasoning.
This logic never ceases to amaze me, especially as most people in an IVA actually continue to pay their mortgage as normal!!!
If you can pay it whilst under the constrictions of a tight budget, surely you can manage after your IVA has finished.
As others have said, 5 years is a long time to live on a budget and we should be encouraged after "doing our time".
This is after all how we are made to feel, as if we have just been released from prison, I understand James' point about bankruptcy and the fact that we chose IVA over it to keep our property, surely these payments must give us some credit score after the 6 years? And what about secured loan payments as well, you'd think these would have more clout than a mobile phone contract!
Bang on beans- they don't realise that there is a strong and ready market out there for new mortgages for post IVA debtors who have learnt to budget, live frugally, and have now more funds to pay a new mortgage. They will learn ...in time one hopes.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
I've never missed a payment on my mortgage or secured loan, my mobile phone contract is up to date, bank accounts (I still have a Barclays account with 45p in it!) have no overdraft and will be showing as ok on my credit file, yet I doubt I would be able to get credit anywhere at the end of 6 years.
Not that I want any!
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Its not just domestic mortgages that are in short supply though, and it one of the contributing factors to our current economic climate. The business I work in has been decimated by the lack of credit available to businesses for both working capital and acquisitions.
If businesses can't secure credit, then how can 'the average' individual be expected to secure any credit. As with everything, it is just a case of sitting tight and waiting for the banks to correct their current stance, having swung from having no concept of risk to being the most risk averse institutions since I don't know what. I have seen profitable, viable businesses denied access to working capital loans because the banks think that they are a litte shaky, which has had a material impact on their ability to function as a business.
I know that this is of little consolation to those who are looking to secure a mortgage, but it shows that it is not just the mortgage market that is suffering, and that the problem is caused by a wholesale seizure of the credit markets. Once they thaw a bit, then maybe banks will want to take a 'risk' (if that is the correct term when dealing with people who know all about managing a mortgage and budget) again.
Are we really surprised? The number of 'For Sale' Boards by me which have been there for 12 months or more is staggering.
My house was valued at £215,000 when I started my IVA almost 12 months ago, an identical house is now up for £189,950 and still cannot sell.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
It took the house at the bottom of our road over 12 months and a25K price reduction to sell (its only just sold).
The writing should have been on the wall when we were looking to re-mortgage to release equity (which would have not resulted in the need for an IVA by taking away the most expensive debts), but the house had already dropped below the value that it was 6 months earlier. It is now worth less than what we paid for it 4 years ago (but not less than the mortgage (onlyjust)).
