Most people believed that when the recession was officially announced as being over, everything in the finance industry involving mortgages , remortgages and secured loans would immediately return to normal.Mortgage, remortgage and secured loan lendi...
Most people believed that when the recession was officially announced as being over, everything in the finance industry involving mortgages , remortgages and secured loans would immediately return to normal.
Mortgage, remortgage and secured loan lending fell during the credit crunch.
However there have been changes changes made to these home loans over the course of the recession that should place them in a more stable position in the future.
Secured loans tumbled more than the other home loans, and between the beginning of 2007 and the start of 2010 secured loans had fallen to less than 20% of their previous level.
Interest rates for secured loans was low up to the end of 2006 and they started at about 5.9% APR.9%.
Before the credit crunch a prospective homeowner loan borrower could obtain a loan of 125% of the property value.
First Plus, the Cardiff based lender, introduced this loan plan and in fact specialised in it and other secured loan lenders such as Paragon and EPF followed their example.
It therefore may come as no surprise to learn that, partly due to the fall in house prices, none of these three firms are still granting homeowner loans with First Plus and EPF completely out of business and Paragon only grnting further advances to existing customers but not granting loans to any new customers.
The 125% homeowner loan plans have long gone as have self declarations of income for the self employed and a good thing this may very well be, as it lead to many people borrowing much more than they could comfortably repay.
One of the first homeowner secured loan lenders to cease trading was Future Mortgages who accepted self certification of income not only from the self employrd but also from the employed.
It was not unusual for certain workers to earn so much that even if they were working twenty four hours a day seven days each week, the amount of money that they claimed to earn was clearly grossly over stated.
Before the end of 2006 some homeowner loan lenders disregarded unsecured borrowings in their income calculation which again lead to many borrowers being over commited financially.
This came as a result of the fact that most lenders then, as in fact now, allow 40% of gross income to cover outgoings and the only outgoings that were taken into account in the past, although this is no longer the case, was the mortgage payment and thesecured loan being arranged.
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