Cynical?

The cynics in the mortgage industry have been calling them ‘liar loans’, but for those who are self employed or have no actual documents to prove how much they earn, we will call them self certification mortgages.
As with standard mortgages, you fill in a form detailing how much you earn, but the difference being that you are not required to confirm how much you earn and the company providing you with the mortgage simply takes your word for gospel as far as how much you earn.

In the last decade self certification mortgages have become particularly popular, especially amongst people with ‘dodgy’ credit histories and this has in turn attracted the attention of the FSA.

Serious Failings

The US has been hit hard after sub-prime customers lied about their earnings in order to obtain self cert mortgages. Now the banks are in trouble and defaults have gone through the roof.

The FSA are now believed to have now found serious failings with the UK market, warning those brokers who are putting through ‘fraudulent’ self cert mortgages that they are being watched and monitored.

Back lash

With the credit crunch in full swing, self cert mortgages are being yanked from the market. According to reports there are now 186 self cert products on the market in comparison to last year when we have the choice of 1,704. The main reason for withdrawal of self cert products is that people who took them out last year can’t afford to pay them back and defaults are rising.

Bradford and Bingley are feeling it more than most on the high street and some £321 million of the self cert mortgages B&B committed to are now 3 months or more in arrears – this is up 37% from the end of 2007.

If you are looking for a self cert mortgage, then consider what you can afford and we will advise you on the best product for you budget.

Bradford & Bingley have announced a hike in their lending rates for standard mortgages, self cert and buy-to-let mortgages.

The news that Bradford & Bingley are to increase rates comes after Abbey also hit out increasing their rates by 0.26%, however, B&B are looking at a figure that is to be anywhere between 0.05% and 0.55% for some of its mortgages.

Those with Self Certification Mortgages are likely to feel the pinch of the increase in rates at this time.

Bradford & Bingley have said that this is part of their normal business activity, but this has seen them reprice all of their mortgages on a monthly basis for the past year and a half. This comes after the announcement that B&B have racked up an £8 million pre-tax loss from January to April of this year, which adds to the £89 million from the credit crunch squeeze and then £36 million from increasing arrears.

All lenders are feeling the crunch, but there are still some very good and competitive rates available and being self cert doesn’t mean that you are not going to be able to find one. Mortgage Brokers have the niche in that they can search the whole market to find exactly what is right for you and at a rate that reflects suits you.

Contact us today to see what we can do for you >>

A housing association in Peterborough have reported a huge surge in the demand for shared ownership housing and interest in the HomeBuy scheme by way of getting onto the property ladder.

A New Build HomeBuy scheme is being run by Cross Keys Homes and is helping those who have not previously been able to buy their home, get onto the property ladder, buying in stages.

Despite the credit crunch people are still looking to secure themselves their own property and the shared ownership schemes are one of the most affordable ways of doing this for most.

Over the past view months Cross Keys Homes have seen a ‘significant jump’ in the number of people registering for information on the new build homebuy scheme and they now have over 400 people on their books waiting for homes to become available.

The major factor in this hike in interest has come about as people realise that buying 25% to 50% of their home is better than just renting a property.

The shared ownership property market is not without its problems though. As other parts of the mortgage market suffer under the increasing rates, a knock on effect has been created for developers who then cannot sell standard priced home and then cannot meet low cost housing build costs. With this in mind, are we going to look at the shared ownership mortgage market drying up?

Mortgage advisors have hit out against the self cert mortgage fraudsters after the FSA clamp down.

Mortgage advisors have asked the FSA for help in fighting back against the self certification mortgage fraudsters.

In a recent Q and A session with the head of the financial crime policy at the Financial Services Association, mortgage advisors have voiced their concerns over self cert mortgages and fast-track sectors of the mortgage market.

One advisor talked of his experiences in not being able to help a customer, and then learning that they had managed to do a deal with another lender. This obviously lead him to believe that perhaps they have indeed changed some of the information that they originally were using to apply for the mortgage with.

With lenders taking full responsibility for approving mortgages based on the information supplied being true, lenders have a lot on their shoulders when they come to agree a self cert mortgage.

A lender described it as someone giving someone else a gun to rob a bank with and then saying that it is not their problem.

The Money Programme has recently blown the lid on mortgage lenders who have been encouraging borrowers to lie about their income on mortgage application forms.

It is now widely believed that many illegitimate self cert mortgages have managed their way onto the property ladder, which has lead to a rise in house prices and consumer spending.

It has been a question that many have been unable to answer – how can so many people afford to buy when property prices continue to rise? And now the answer is out and more astonishing than ever or predicted. Borrowers are lying about how much they earn, and lenders are letting them!

Unbelieveable, but true according to the money programme, and now one of the many reasons why homes up and down the country are being repossessed and just another example of the credit madness that has gripped the country and how we are all paying for it now.

The Money Programme went to several lenders up and down the country and found that many of them were encouraging borrowers to lie about their income so that they could offer them as much as 10 times their actual salary. This may seem like the lender is on your ‘side’ and is trying to help, but in actual fact all they are doing is causing more problems for you in the future, when you cannot afford to make your mortgage repayments.

Household debts now stand at 134% of income, which is a record figure. In addition, the number of personal bankruptcies has increased by 30% since last year; the most recorded.

Click n go Mortgages do not, by any means, endorse this kind of practice and encourage our mortgage applicants and help them to find the right mortgage. If you are looking for a self cert mortgage, then we can talk you through every aspect and make sure that the mortgage you chose is tailors for your situation and income.