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remortgage as everyone knows is a home loan product and what
it in fact is the rearranging of a mortgage that currently exists
on a property.
Only homeowners
can obtain a remortgage or a mortgage as they are both loans
that need the asset of a property.
This all
lead to mortgages and remortgages being very readily advanced
as they are secured loans, secured on the equity of the property
No matter
what debts a homeowner has to pay each month on credit cards,
personal loans, etc. the most important debt that he must
pay is his mortgage as there is nothing in life more important
than keeping a roof over your head.
Other
debts can wait as long as the mortgage is paid and there is
enough food in the cupboard and in the fridge to feed the
family.
This certainty
that mortgage lenders had that the mortgages and remortgages
they advanced being repaid faithfully each month , and being
certain that no one in their right mind would apply for a
mortgage or a remortgage that they could not comfortably pay
back.
All this
lead to both remortgages and mortgages being granted often
in rather a loose manner, with people in fact being granted
mortgages to buy a bigger house than they could actually afford
and the situation was the same with remortgages.
Perhaps
the mortgage and remortgage lenders badly misjudged human
nature thinking that the facts provided on their application
forms were in fact accurate, when in fact this was often not
the case.
It was
usual for self employed applicants to declare their own income
without providing any proof of earnings when arranging a remortgage
or mortgage.
It is
natural to want a nice home and a self employed applicant
could lie about his earnings to buy the dream property.
They could
simply state how much they earned on a bill head and often
this bore no resemblance to what the correct income was.
Similarly
the exact same self declaration happened as regarding remortgages
and sometimes a self employed applicant whose business was
in trouble or who owed Income Tax or VAT took out a remortgage
to prop up his business.
This often
leads to mortgage arrears and we are witnessing this at present.
Now when
applying for a remortgages or mortgages the prospective borrower
if self employed must produce at least an accountant's letter
or even two years full accounts.
Many homeowners
are in a situation of having mortgage arrears through no fault
of their own due to having taken out a home loan that they
could comfortably afford at the time, and having been made
redundant they can no longer afford.
On applications
in the past, many would be remortgage borrowers under declared
the amount they spent each month on financial outgoings such
as food, utility bills, etc, and as a direct result, borrowers
must now produce three months bank statements to categorically
prove what they spend each month on these items.
Now it
should be the case that mortgages and remortgages are affordable
to those applying.
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