More Homeowners Face ReMortgage Hell as Lenders Pull 100% loans
Homeowners facing finance problems may be a step closer to repossession as mortgage lenders pull their 100% loans.
This means that for those who need to remortgage soon, not only are rising interest rates from sub prime lenders and falling or static house prices an issue, but they may now find that they are unable to remortgage to the full value to pay off their current mortgage with an existing lender.
If a property worth £100,000 was 100% mortgaged 2 years ago and has fallen in value even by a few percent, then this means that a new mortgage may only cover around £88,000 towards paying off the existing mortgage.
The result?
Many will be unable to remortgage, will fall into the dreaded negative equity not seen since the early 90s, and will be forced onto so-called standard interest rates with their current lender.
With some sub prime lenders this is 10% or more.
This news in from The Guardian online:
“Cheltenham & Gloucester will tell homebuyers today that they must put down a minimum deposit of 10% if they want one of its mortgages, as the clampdown on lending gathers pace. Meanwhile, Royal Bank of Scotland and NatWest are withdrawing from offering mortgages for more than 95% of a property’s value.
C&G - owned by Lloyds TSB - is one of the biggest mortgage providers to rein in its lending in response to the credit crunch. The change means that a typical first-time buyer in London will have to stump up almost £25,000 to obtain one of the company’s home loans.
RBS/NatWest has already pulled out of offering mortgages above 95% through brokers; after March 7 this will also apply to branch-based home loan applications.”
Read the full article here
Filed under: debt advice, homeless, housing market crash, mortgage approvals, mortgage arrears, negative equity, recession, sub prime, uk remortgage | Tagged: 100% mortgage, house prices, negative equity, remortgage, repossession, sub prime, uk interest rates
