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imported post -
14-03-07, 07:55 AM
Incog, Interest rates are normally the same for self certs. You are technically viewed with some lenders as less of a risk because SC normally come with higher deposit criteria.
Yes crooked Brokers up and down the country use this type of mortgage to obtain funds for people who otherwise wouldnt be able to qualify. Simply by inflating the clients income to match the criteria. It is mortgage fraud nevertheless and one needs to be aware that if caught out, either the broker will be responsible for the lie or the client. This can happen for example if the accessors when checking your application find adverse credit or undisclosed committments on your credit file. At this point they reserve the right to request proof of your income as your credit rating has thrown you slightly outside of the criteria. They may also as another checking measure, put in a call to your employers to check your story about income etc. Obviouslyif you've lied the stories wont match unless you haveanticipated the callsomehow with someoneschooled on giving the correct answers. Some ultra dodgy characters submitt fradualent payslips at this stage as well and end up incriminating themselves when further checks are done. Some get away with it too...
A few years back there was a big documentary on it and since then a few lenders tightened up their procedures. Maybe that was just to please regulators. The bottom line is banks are in the business of lending you money and they never make their criteria too difficult to obtain. Abbey National have recently led the way in being THE most irresponsible lender by lending the most money per your income. Northern Rock are worse imo but they dress it up differently so its not publicly obvious that they willlend huge amounts per your income.
Years ago banks used to lend 3 times your single income. Then we had the house price explosion, so the banks increasedthis multiple to 4 times and in Abbeys case five times your single income. Just so this matches the purchase prices of homes and means they hit their lending targets. However the issue is affordability. If houses prices have increased and wages havent followed respectively, then the gap on affordability widens.
For this reason i reckon we are potentially sitting on one of the worse recessions EVER. If interst rates keep rising then the amount of people who have borrowed mortgage amounts unproportionately to their incomes will become evident. Put that together with the high balances at present on credit cards, and you can see that the carnage willbe epic. The only saving grace is that people have more equity in their homes now than they ever did, so remortgaging or downsizing could save some if this were ever the case.
We need another few years of stagnant house pricesto allow the elements to replenish themselves. Not happening at themoment though.
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