Careers In Mortgage Lending
Mortgage Misery And Mayhem
The last half of this decade has seen borrowing rates soar in the UK, with many home-owners trying to re-mortgage their properties to be relieved from crippling repayments. But they face serious challenges. While sub-prime Mortgages in the U.S. appear to have been a major cause of their current fiscal predicament, the United Kingdom heard the warning, and lenders becoming more selective about who they will lend to.
It has been long underway, but the housing bubble has finally burst, with the market in a state of depression, are home-owners also find a negative equity a serious threat. Properties are being valued at lower prices, and in some parts of the country, dipping as low as 60% of the price paid as late as in 2007. As such, the Rate Value (LTV) The loan can have fallen by a equivalent amount, which means home-owners no longer able to convert, and is instead caught by having to pay back the old, higher value on a monthly rate that is hard to pay. When you consider wage cuts, wage freezes and layoffs of the last 24 months, a bleak picture is painted. Inflation is rampant and the economy is grinding to a near-halt.
While all borrowers face dilemmas when determining whether to take a fixed or a variable rate mortgage, the worst affected by this ugly situation is these customers who want to get out a fixed-rate regime in the past two years. Chances have increasingly high that they will be pushed to accept a standard variable rate mortgages. This means that instead lowered their costs by moving the pledge, may be the opposite in fact be true, with repayments increasing by a total of up to a staggering 65% or more. Even the best two-year prices on offer, could watch them back about 35% more than in their original agreement.
Worse, the last downturn in the housing market lasted decades, which means we could be in a similar long rough patch in this game. This means that home owners may be stuck in this situation at mercy of the lender in the coming years. Those who took mortgages with an LTV of 90% or higher, it especially difficult. New lenders see them as a bad risk, so it is highly unlikely that there will be a quick solution to their predicament.
But it's not all doom and gloom. Home-owners in need of a remortgage still have a few options. Some 18 months since the law changed to make use of independent financial advisers (IFAS) is obligatory. Although this may seem like an inconvenience by previous consumers were allowed to arrange their own mortgage these specialists can draw on a wealth of industry experience and negotiating skills to place the client in such a way that the grant of a remortgage seem more attractive to lenders. They will also be able to offer invaluable insights into which solution is best for the client regarding conditions, prices and add-on fees the lender may charge.
Being caught in this kind of mortgage trap can be scary and depressing, especially when individuals is saddled with the kind of negative cash flow situation through no fault. A study in 2006 estimated that the monthly mortgage payment of an average wage worker (Approximately £ 23,500 at the time) constituted 60% of their net salary. Things have deteriorated since then, and in this harsh economic climate, it is more likely that they will be hit by severe economic pressure from other creditors, while referring to a salary which has barely risen this year.
Although there are many sources of information from Citizens Advice Bureau to websites like this, it can be difficult to bring yourself fully up to speed at the same time as holding a career and family life, which explains why personal Debt Management companies are becoming increasingly popular. For a fee, they will ensure that they find the best terms for their clients and offer advice on mortgages as a part of the package. Some even operate on a commission basis, where they take their fee from the money they save you, which is an attractive option for cash-poor. No matter what your fact, if you're caught in a similar situation, the key is to act now. Seeking independent advice from a qualified professional will ensure the consequences of your current situation can not be with you until the end of mortgage term, potentially decades into the future.
About the Author
Luke Notley, Managing Director of In Control Debt Management Solutions.
In Control are an ethical Debt Management company who proactively and intelligently manage over £25,000,000 of UK Consumer Debt. By virtue of years of industry experience combined with negotiation skills that are second to none, they are able to freeze interest and minimise service charges whilst consolidating all the client’s financial commitments into a single affordable monthly payment.