Mortgages

[Simbel]

Hello everyone, hope you are all well. Just need a little bit of advice. Our mortgage is with a large lending co GE Money. We have been on variable for nearly two years. I rang them this morning to find out what our options are, whether we could change product, may be do interest only etc only to be told that they don't do mortgages anymore. The only product available to me is what I am on at the moment which is the variable. No-one notified us at any time of any changes - I don't know what will happen in the future for us now. As when interest rates start to creep up and keep going up we won't be able to afford it. I don't know what to do - I know that it's impossible to get a mortgage from anyone at the moment. Any advice greatly appreciated

[Andrew Graveson]

Hi Simbel,

This answer might not provide much comfort, but perhaps there is in fact little you can do and therefore little point in worrying about it too much. Many lenders are not offering any replacement products when current deals expire.

The "experts" are predicting interest rate rises later this year and eight million mortgages will be affected. This will include many people who are in IVA's and contributions may need to be adjusted accordingly.

[kallis3]

I'm not looking forward to that either as I know it is going to come sooner rather than later now.

Simbel, as and when it happens you will have to go back to your IP and see if you can get the payments reduced.

[Simbel]

Although I understand that interest rates are on their way up - I fail to understand why banks think that someone in an IVA is more risky to lend to than any normal Joe out there (in this day and age anyone can be made redundant, anyone can find that there is no more overtime, and what is more stupid is that it's not someone who is in an IVA that is going to run up debts on their credit cards because obviously we can't use any, surely we are more of a safe bet than anything else). They don't actually look into your circumstances - we have never defaulted on our mortgage ever and two years ago our mortgage was approximately £1,800 per month! - surely can no financial institution see there is a gap in the market for lending to people like ourselves in IVA's and not at ludicrous interest rates of 9 and 10% - just wishful thinking I suppose.

[Andrew Graveson]

I've asked a couple of senior people in mortgage lenders the same question.

The answer tends to come back along the lines that their investors have no appetite for participating in this type of business.

As mortgage funding is limited for everyone at the moment, lenders are able to cherry-pick amongst groups they perceive to be the least risky. This perception obviously isn't especially informed, neither mortgage lenders nor their investors have any particular insight into debt solutions such as an IVA.

[kallis3]

Unfortunately we will always be perceived to be a bad risk whilst in an IVA. They just look at your credit rating, not the fact that your mortgage is up to date. My own mortgage company told me that I was bankrupt!

As Andrew says, with the market as it is at the moment, companies can pick the people who pose what they perceive is the least risk.

Those of us in an IVA are not in that group.

[Simbel]

Well after that panic attack the other day regarding the mortgage - looks like Andrew was right - no point in worrying about it as there is nothing we can do - but fortunately for those of us on variable rates - it looks like we have some respite in the form of overall growth or lack of it - apparently it means it's almost inconceivable for interest rates to go up as early as economists were predicting

[kallis3]

Hopefully not! Glad you're feeling a bit better Simbel.