Bank wants to pry into your personal spending

by Property118.com News Team

17:21 PM, 24th February 2012
About 7 years ago

Bank wants to pry into your personal spending

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Bank wants to pry into your personal spending

Mortgage underwriters are set to ask borrowers detailed personal questions about their spending habits as the banks tighten up lending rules.

Santander’s Abbey for Intermediaries – which includes buy to let lending for landlords – will quiz applicants about how much they spent on Christmas and birthday presents.

Other one-off spending will also come under scrutiny, like holidays, celebrations and ‘miscellaneous’ spending.

Abbey has warned borrowers they expect realistic cash amounts entered on application forms that may need to be supported by receipts or bank statements – entering a zero will result in a declined application.

Previously, Abbey has assessed personal spending by entering an estimate based on figures from the Office of National Statistics.

Nationwide’s buy to let brand, The Mortgage works (TMW), has revised some landlord and guarantor mortgages.

Buy to let deals now include a two-year fixed rate at 4.49%, up to 75% loan to value with a 3.50% fee for buying and remortgage.

Other new packages include two-year trackers for buy to let at 3.64% and let to buy loan at 3.94%.

Both come at up to 65% loan to value, with 3.5% arrangement fees.

Meanwhile, mortgage brokers are optimistic that buy to let will continue to grow – eight out of 10 expect to see the sector grow for landlords over the next year, according to a survey by the Intermediary Mortgage Lenders Association (IMLA).

John Heron, IMLA chairman, said: “Buy to let is becoming increasingly important as more people move into the private rented sector. For landlords, an intermediary can provide invaluable support during the process of finding the right mortgage and right mortgage lender for their needs. “The same is of course true of the market in general. Intermediaries are best placed to find a solution for borrowers who return empty-handed from a trawl across the high street lenders. The benefits to the consumer of professional mortgage advice are not always rated highly enough and need to be better communicated.”



Comments

18:08 PM, 24th February 2012
About 7 years ago

Anyone planning a BTL mortgage application should now start creating a plausible bank account showing that they live like a church mouse!
You will need at least 6 months worth of statements.
You should use credit cards for payment of discretionary spend which the bank won't like seeing.
Pay these bills from resources other than from your bank account.
You need to show the max coming in and the plausible minimum  going out.

Mark Alexander

19:03 PM, 24th February 2012
About 7 years ago

Having sat the other side of the desk Paul I can assure you it doesn't work that way. Lenders know all about your credit cards, balances, limits, missed payments etc. It's best to disclose all sources of income and expenditure. Either a person is a good risk or there are not. A person trying to present an fabricated image of their finances will soon be spotted and will be declined where they may not if they were to declare the full picture. In the late 80's I worked for an American bank. The lending climate was much as it is today in 1989, i.e. lenders could cherry pick the business they really wanted. The unwritten rule was "if in doubt, kick it out".

20:04 PM, 24th February 2012
About 7 years ago

Yes I know what you are saying; but you just have to be shrewd as to how you manage your plausible circumstances.
Given a bit of thought it can be done.
Cash is a good way to manage off plausible things as there is no trace.
I did it for 15  years and they never sussed me.
My plausible account was Citibank!!!
You have to do this otherwise if people put down their true situation no one would ever get a loan.
I was never spotted as I maintained my plausibility for years.
I got everything I applied for.
You just had to know which credit reference agencies each used and tailor accordingly.
I appreciate though that things were let us say a bit more cavalier and that now they have gone completely the opposite way.
Lenders will find it increasingly difficult  to lend as the vast majority of people are just about coping.
So I don't tknow how they advisors are going to meet their lending targets as the population just won't meet their criteria.

Mark Alexander

20:43 PM, 24th February 2012
About 7 years ago

I think we will have to agree that we are looking at this from very different perspectives Paul. I have never beleived that it is a good idea to create a false impression of my financial position and that strategy has served me well.

You may not be aware but it was Citibank who invented the credit card and indeed credt scoring when the founded the "Diners Club". They offered a credit card (guaranteed acceptance) to everybody in the state of New York with a small credit limit and incentived all restaurants to accept them. From the data they captured at application stage they created a very basic level of credit profiling based upon who paid them back. To this day Taxi Drivers are still considered a poor credit risk based on that very crude early research.

Credit scoring and associated insurance backed contracts have evolved rapidly in recent years and I suspect the tricks you played a few years ago are unlikely to be successful today. If they were not, the RGI insurance policies you so heavily rely upon in your strategy as a landlord would not be worth the paper they were written on.

22:44 PM, 24th February 2012
About 7 years ago

I would fail based upon mental incompetence. Who ever remembers what they spent on Christmas presents?!

11:35 AM, 25th February 2012
About 7 years ago

If things have changed since 2010 then yes you are most likely correct; the game has moved on.
From an RGI perspective I don't care what happens as long as I get paid out.
The underwriters are the one's who have to assess and take the risk.
It is a business decision by them.
Not many people knew how to work the system like I did.
Martin Lewis came close; but I was doing things even IFA's couldn't get their heads around.
Just wish I hadn't wasted all my expertise on lending those resources I achieved to idiots who chose not to pay me back!
If I had put it in property I would be sitting  equity of about 1.2 million.
That would have been just out of 4 properties!
But as you advise I think the credit game has tightened up considerably; preventing let us say, my more previous creative financing methodologies!?


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