Having recently had an application declined by Godiva Mortgages due to the conduct of the client’s bank account, it strikes me that lenders are adopting a very sensible attitude to lending at high loan-to-values (LTVs).
My experience of using Northern Rock’s ‘Together’ product is that the underwriting criteria is more robust, so clients are not being exposed to greater risk. And let’s face it – this type of product is usually used to consolidate higher rate borrowing and therefore reduce the outgoings, making it easier to meet the mortgage payment. In difficult times, it is surely best to find a way of lowering monthly expenditure rather than get slowly buried by the burden of debt.
With professional advice, clients can be helped through a period of hardship and as most of these products have a good degree of flexibility, this need not end up costing more interest overall. I believe that consolidating debt using an additional unsecured facility is definitely the right thing for many clients. The simplicity of having the debt all in one place and knowing what needs to be paid each month is often more preferable than juggling with lots of different loan payments.
The key is to use this type of product in the right circumstances – which is what makes us professionals, isn’t it? All the clients who we have placed with a ‘Together’ type product have expressed how pleased they were to have done it and all recognise that they owe more than their property value. But what difference does it really make if you have this level of debt all in one place rather than spread about between several lenders at a higher monthly cost?
I welcomed the introduction of affordability based underwriting because that’s what it’s all about – whether you have more coming in than you have going out. I hope that these products will remain a fixture in the mortgage industry and they should do if lenders are sensible about who qualifies for them.
Laurence Hughston
Managing director
Mortgage UK
get the daily news delivered to your inbox
find the latest industry jobs
register for the next forum
