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Borrowers must be able to afford residential mortgage repayments
Borrowers must be able to afford residential mortgage repayments
Richard Alton runs Alton Mortgages, a whole or market broker based in Maidenhead
Maidenhead,
Berkshire,
United Kingdom
(prbd.net)
07/12/2012
According to the Financial Services Authority (FSA) lenders must carry out more stringent checks to ensure that those with residential mortgages can afford to keep up with repayments and that those looking for interest-only loans need more than just rising property prices to ensure the shortfall is paid off at the end of the mortgage term.
Richard Alton runs Alton Mortgages, a whole or market broker based in Maidenhead. Established in 2005, customer service is at the heart of what they do, and they recognize that their clients are individuals with very unique requirements. He says:
"It is not unreasonable for lenders to check borrower's incomes; my view is that if this had been done properly in the first place and we never had had 100% mortgages we wouldn't be in the mess we are in today. It was the FSAs responsibility to look after the British Public and I must admit they did not do a very good job.
"How much time would the average person think that Northern Rock lending 100% plus to the value of the property is a bad thing, thus it must ultimately have been the FSAs responsibility to do this on our behalf and to let a lender go bust because they encouraged irresponsible behaviour is in my opinion inexcusable, also not to mention the shareholders who lost everything, the same was also true of Bank of Scotland which was the main reason Lloyds Banking Group had to buy the Halifax Group of Companies.
"I also suffered from poor regulation in that my mortgage network which is directly authorised by the FSA was allowed to be very badly run and they went bankrupt owing Mortgage Brokers millions of pounds in the process whilst the people running the business have never been brought to justice.
"It is my honest opinion that if the FSA had been better run during the hay days, if they had not allowed Self Cert or Liar Mortgages if they had not allowed 100% or 100% + mortgages, if they had forced to check incomes for borrowers then the pain we are going through now would have been no way as deep as it is now.
"I agree they are putting common sense back into lending finally but lenders have already made most of these adjustments so what the FSA has done is just putting clarity around this area.
"It is common sense that a repayment vehicle is required at the end of the mortgage term, what banks often don't allow is bonus payments etc. as they can't be guaranteed that the borrower will use this means of payment to pay off the loan. It is however interesting that Barclays will now allow interest only mortgages as long as the loan is more than £300,000. To me this means that they trust people with the bigger mortgages and ultimately bigger incomes to pay off their mortgages in this way.
"The other point to make about interest only and it is one that is always overlooked is that the power of inflation will always reduce the value of the debt so an interest only mortgage of say £100,000 may only be the equivalent mortgage of say £40,000 in 25 years' time. I do however agree that for most people they need to have a repayment vehicle in place but I would argue against it being an ISA (sold by the banks!!) as this is a form of gambling as it is relying on stock market returns and we all know that over the last decade the stock market has performed very badly.
"More help is required for the self-employed as they are the life blood of the economy, we need to get more people starting businesses as this is how the economy will start to recover, whilst we are over reliant on big Companies it is always dangerous as they have a habit of going where they can pay the least tax as we have seen in the headlines recently."
Notes to Editors
Alton Mortgages is an established whole of market mortgage broker based in Maidenhead, Berkshire. Established in 2005, customer service is at the heart of what we do, and we recognize that our clients are individuals with very unique requirements. Click here to find why you should use a broker. We work with individuals and families to provide them with an exceptional residential mortgage service. Click here to find out more about Alton Mortgages
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About
Alton Mortgages is an established whole of market mortgage broker based in Maidenhead, Berkshire. Established in 2005, customer service is at the heart of what we do, and we recognize that our clients are individuals with very unique requirements.
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