Ross Martin blogs:
If it wasn’t already obvious, post-MMR (Mortgage Market Review), the financial landscape is a different beast.
Frighteningly scared of more massive fines, I would hesitate to say lenders seemed to have over-reacted, however, that isn’t really the case. The MMR occurred in October 2012 and what we have experienced is a slow but continual tightening of the noose with internal bank policies, which are implemented without advance warning and seemingly at random.
It is perhaps an obvious corollary; that borrowers expectations have taken longer to adapt to the “rules of the game”.
In an interesting case with a very experienced mortgage broker we work with, we have today established that a number of lenders now also appear to have constricted their rules in remortgaging and drawing down surplus equity.
Off the top of my head; I can think of a number of situations some of my clients are thinking about, that now seemed doomed to failure:
- Drawing down equity to pay off a directors loan account (considered a “business” transaction)
- Leveraging the property to simply hold cash reserves rather than having it tied up in the property (considered irresponsible to receive a lower rate of interest than can be saved by having a lower mortgage)
- Drawing down equity to pay off tax arrears (again, irresponsible)
Reading between the lines, drawing down equity to put into an asset (for example a home extension, or another buy-to-let property) is acceptable but a lot of other reasons are now “irresponsible lending”.
If you would like more information on mortgages and would like to speak to Ross, call 01872 300232 or email us at hello@hivebusiness.co.uk.
