Mortgage lenders are coming under increased pressure from the Financial Conduct Authority and the financial ombudsman to consider applications to port mortgages more fairly.
Since April’s FCA conducted Mortgage Market Review, there are scores of people complaining of unfair treatment at the hands of mortgage lenders, when trying to move their existing mortgages to a new home, something that should be considered more fairly, say the regulator.
Porting a mortgage involves taking an existing rate or scheme with you when you move home, potentially saving thousands in Early Repayment Charges. Many lenders ‘sell’ it as a feature of the mortgage, but just how realistic is it to expect this to be possible in the future?
“Whilst many mortgages are indeed portable, the ability to actually be able to do so at some point in the future hinges on meeting the lender criteria at that point in time, something that many banks or advisers fail to point out adequately” said Taj Kang, Business Development Director at Contractor Mortgages Made Easy.
“We’ve probably got more clients who have been hit the hardest as a result of a few lenders changing their stance on the way that they underwrite contractors. It’s a bizarre situation but many people come to us to try and port their mortgage and come up against hurdles.”
It isn’t, necessarily, these cases that are the more problematic ones however, as Taj explains.
“A change in lender criteria is something that nobody can foresee, and is just plain unlucky. Many brokers don’t advise however, that in order to port a mortgage, you would need to meet your lender’s mortgage criteria in exactly the same way as making a whole new application. This can cause huge frustration for borrowers.”
“The more stressful cases that our clients are encountering are those where their current lender no longer has the same criteria when assessing contractor income, as their guidelines are constantly tweaked in order, ironically, to be able to lend more often.”
This makes it more important than ever before, to engage a mortgage broker with a thorough knowledge of your own circumstances, in order to ensure that you are not caught out.
“The number of people who come to us having spoken with a generic broker, often based in or affiliated to an estate agent, is staggering” says Kang. “Even though regulation of our profession has never been tighter, it seems that some are continuing to push the mind set of ‘see what happens’, as they take a scattergun approach to mortgage applications, in turn damaging clients’ credit profiles – sometimes irreparably.”
“My advice would be simple; speak to a broker that you can trust. Recommendations from friends, family or colleagues are a great place to start as this is the best proof of a good service; that others are happy to recommend them. Using an inexperienced broker, or worse still trying to sort it yourself, could mean that even the most clued up adviser is unable to help.”
Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
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