Repossessions to rise

[mikebdomain]

Talking about the recent good 'old' days

- low interest rates
- easy to get high LTV mortgages on self cert

What's interesting to me is the number of people that complain about having an affordability issue when they come out of their fixed rate period.

We do not get 25 year mortgages anymore! People mortgage and then remortgage constantly when their fixed rate expires, this costs them (the applicant) an absolute fortune and they rarely make up the amount it costs, before they are looking to remortgage again… People should make allowances for affordability for the reversionary rate and not the fixed rate.

Whose responsibility is it to ensure the borrower truly considers the continuing costs of remortgaging and future affordability issues?


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LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

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[Andrew Graveson]

A decent mortgage sourcing system and/or broker will be able to compare the whole-life cost of a mortgage including associated costs. That number is more valid to a consumer than the interest rate.

It's not just fixed rates. Same applies to trackers/discounts. A lot of people leaving fixed rates are moving into trackers/discounts now because (rightly or wrongly) they perceive that interest rates will trend downwards. I think that's why there's so much switching and short-term deals; many consumers believe that they can take advantage of changing market conditions.

With future reversionary rates and affordability surely an adviser must advise based on the risks but the borrower must take responsibility for the outcome.

In terms of risk and cost there's no difference between a sub-prime or prime mortgage (or any other type of business transaction). Lenders/sellers bid with their prices and consumers take the best deal available to them. Seems strange to pin that specifically on sub-prime mortgage lenders. Could say the same about two companies that rent bicycles out.


Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[mikebdomain]

I am not specifically trying to pin it on sub prime mortgage lenders or brokers - I am just asking the question.

On the subject of risk to whom are you referring to the lender or the applicant?

The risk to the lender is entirely different when dealing with sub prime and prime products and applicants.


FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

see feedback and testimonials at:
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Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
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[mikebdomain]

And to be honest most consumers are only interested in the upfront costs and the rate available to them, rather than the whole-life cost of a mortgage - well in my experience anyway.

FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
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[MelanieGiles]

The irony is, boys, that over the life of an IVA you people will probably earn more than the poor old Supervisor who has to supervise the arrangement!

With a remortgage at the beginning to get a more affordable payment, another one half way through when the fixed rate finishes, and then again in the final year to raise equity. I wonder when creditors will pick up on that little chestnut!!!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[Andrew Graveson]

Just your comment regarding who will take the biggest risk being what the sub-prime market is built on. It is the lenders risk to which I'm referring.

I think what you're saying is that the market is defined by the question as to who will underwrite a level of risk at the lowest cost, rather than who will take on the biggest risk?

To me the cost/risk trade-off represents any competitive market rather than a unique indentifier of the sub-prime mortgage market.

Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[Andrew Graveson]

Hello Melanie,

If an IVA generates three remortgages I'm sure you'd be right.

Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[mikebdomain]

Melanie

This was my point with SIVA's - I was hoping that there would be plans to release any equity six months in.

This would allow the borrower to achieve a fairly decent product for the SIVA five years (as there would not be any affordability issues) with a six year fixed rate, thereby giving stability during the course of the SIVA and also for the year after the SIVA had completed, allowing them to get a standard product at the end of the fixed term.

Annoyingly we had half designed the product and had two lenders interested, but obviously our plans had the bottom kicked out of them with the realisation that there was no plans to release the equity at an early stage of the SIVA.

Never mind what brokers earn from the remortgaging (I would say that, wouldn't I) think of the costs to the applicant.


FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
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Please read our Initial Disclosure Document(IDD):
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[MelanieGiles]

Mike

The intention in SIVAs was not to raise the equity in the first six months, but to calculate the sum based upon an initial valuation. Equity of that sum would then be raised at the end of the SIVA (ie in year 5) and not the beginning.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[mikebdomain]

[:)] I realise that after our last discussion.

FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf

[Adam Davies]

Hi
If we see a period of nil house price growth wouldn't it be more prudent for the creditors to insist on a remortgage within the first six months to release equity ?
Regards


Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[mikebdomain]

A bit of inside good news SPML are going to relax their standing on IVAs and Bankruptcies from Friday this week and they have managed to securitise their book. Have not got all the details, but I am assured we are leaning toward their old products...

FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

Firm FSA No:313790
Personal FSA No:MJB01557

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf

[sonyse2t5]

The IMF have said this a few weeks back. With so many borrowing 400%/600% of their income just to get on the property ladder....many will have to give the property back.

The chancellor had said previously that it is wrong to put pressure on consumers to borrow so to have their property if they can't afford it. The Council of mortatage lenders scoffed at that comment. Well we'll see what happens now

There are people with loans secured on the back of EQ rises. Bad move.