The Mortgage Minefield

Dear All

If you are considering remortgaging to another lender in order to obtain a cheaper interest rate. Beware! You are about to enter the Mortgage Minefield.

If you haven”t changed your lender in the past few years, then you are in for a nasty surprise. What used to be a straight forward process, has now become a very difficult task indeed. You will no longer be a customer. You will become a profit centre, to be “milked” for the maximum profit they can extract from you.

If you fall into any one of the following categories, then you seriously need to plan well ahead, before you attempt to remortgage:-

1) Aged 40 plus.

2) Have an Interest Only mortgage.

3) Self employed.

So how do you escape from your lender”s clutches? Plan ahead & take independent financial advice.

Lenders have for a while become very ageist. They will discriminate against you if you are aged 40 plus. This is because most lenders take the view that you will retire at age 65. Hence they will limit your mortgage term to age 65. They will want you to be able to fund your mortgage from your pension, investments or other sources. In fact, anything apart from earned income!

If you have an Interest Only mortgage, then unless you have a lot of equity in your property, the new lender will insist that your new mortgage will be on a capital & interest repayment basis. This will make your monthly payments a lot more expensive. The shorter the term of the mortgage, the more expensive it will be.

If you are self employed & having read the above, not given up yet! Then you face another obstacle – your accounts. Lenders now want to see an increasing net profit figure over the past 3 years. If your income has not increased each year, then the lender will “average” your income over the last 3 years. The effect of this will be to greatly reduce your income, which the lender will use to assess affordability of the mortgage. In effect, this will probably kill off your application there & then.

If you have successfully navigated the above, then you can look forward to being credit checked, credit scored & not forgetting, having your personal expenditure assessed for lifestyle issues, which the lender may deem inappropriate.

And if you do manage to successfully pass all the above, you can look forward to paying grossly inflated arrangement fees as your reward.

I haven”t even touched on when the lender does the dirty on you by hiking your mortgage payments, just to boost their profits. I”ll cover this one in another blog.

If you would like to find out more & to discuss your own requirements, please get in touch.

Regards

Gary