Low base rate may not help homeowners struggling to pay mortgage increases says Payplan.

Payplan, a leading provider of free debt advice, has today welcomed the Bank of England’s decision to leave the base rate at 0.5% – but say it may not help homeowners already struggling to pay mortgage increases.

Jason Eaves, a Director at Payplan, said:

“Whilst the base rate has remained unchanged we have already seen a number of mortgage lenders increase their SVR (standard variable rate), and the Euro crisis could push the cost of mortgage borrowing even higher.

“Many households have faced a sustained squeezing of their incomes in the last few years while prices have continued to rise. Now an increase in their mortgage payment could be the straw that breaks the camel’s back.”

The group who will feel the economic pinch the most are the 800,000 mortgage customers who have struggled to meet their mortgage commitments and already been provided with some level of mortgage forbearance by their lenders.

He added:

“Prior to the credit crunch, financial deregulation, low interest rates and supreme confidence in the economy, led to a significant expansion of credit.  For many low and middle income earners spending exceeded earnings for the ten years leading up to 2007 and this was fuelled by increased borrowing.

“Whilst there is evidence that some consumers have been using the windfall of super low mortgage rates to repay personal debt, there are many who continue to have significant unsecured debt outstanding.

“At Payplan we have almost 20 years’ experience of helping people with debt problems.  We know some consumers take out new debt just to make payments on existing loans. This may provide some breathing space but is not sustainable.

“Our advice to anyone who is worried about falling into debt is to seek help as soon as possible. Further information is available here on our website or we can be contacted free on 0800 294 5205.”

For further information, or to arrange an interview, please contact Jane Jenkins, PR Manager on 01476 581 279.

Written by Gemma on June 7th, 2012

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Posted in: homeowners,increases,mortgage,Payplan,struggling

Mortgage adviser’s £1.6m con foiled by bankruptcy

A respected mortgage adviser who was introduced to ‘cherry-picked gullible clients’ by a partner-in crime-has been given a two-year suspended prison sentence when his £1.6 million fraud was uncovered after his bankruptcy sparked an investigation into his affairs.

Wealthy Gott used his mortgage advice company as a cover for the scam. He wore expensive suits and took frequent foreign holidays, boasted that he earned £170,000 a year as Managing Director of Red Brick Mortgage Services, reported the Daily Mail.

His small firm provided loans for a string of friends and acquaintances between 2002 and 2007, conning the banks out of £1.6 million in all.

Anthony Gott, 46, worked with partner-in-crime David Hood, 47, in a jointly run £1 million mortgage scam. Hood would cherry-pick gullible clients to make the applications while the operation was fronted by Gott. But the pair were caught when Gott became greedy and went bankrupt, sparking an investigation into his affairs.

The two men, who dreamed of ‘executive size’ pay packets, conned banks out of £1,034,017 in house loans over five years. The remaining £600,000 attained was presumably of Gott’s own accord.

Customers filled in fake occupations and incomes on mortgage applications to get loans up to six times what they would normally be able to borrow.

The fraudsters used self-certification mortgages open to the self-employed to con High Street banks and loan companies into advancing money for properties.

Gott employed 25 people and lived in a £450,000 converted barn in Rawcliffe with wife Kim and had used some of his £800,000 ill-gotten gains to buy a swimming pool and decorate his home.

The joint fraud operated from Gott’s offices near Goole, but Hood hid vital financial papers in a council lock-up garage.

Hood, from Goole in East Yorkshire, traded in second-hand goods and managed a burger van as a cover for his illegal schemes.

Wheeler-dealer Hood would sign fake mortgage applications and was determined to earn a fortune through his dodgy deals. He even bought five buy-to-let properties of his own.

Hood pleaded guilty at Hull Crown Court to two charges of obtaining £231,000 by deception. His girlfriend Tina Lacy, of Hemmingbrough, pleaded guilty to three charges of obtaining money transfers by deception and one of fraud.

Hood recommended customers to Gott for a commission. Despite being jailed in 1990 for obtaining a mortgage by deception, he took out two false mortgages in 2003 and 2006 on his own home.

Judge James Sampson gave Gott a two-year suspended prison sentence, while Hood and his girlfriend were given 18-month suspended prison sentences and 300 hours community punishment.

Judge Sampson told Gott: “It was dishonesty and greedy behaviour on your part, which took advantage of the greed of lenders.

“What the people who have signed your character references should realise is, you are a thoroughly dishonest man.”

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Posted in: advisers,Bankruptcy,foiled,mortgage

Controversy over banks’ tactics to help avoid mortgage arrears

There are many homeowners at present who are just about managing to keep on top of their mortgage repayments each month, with the financial relief coming as a result of the rock bottom base rate, which still stands at just 0.5 percent, where it has been for over two years. However, many of these homeowners could find themselves in serious trouble if the base rate increases and their repayments rise.

Some banks are now taking what is being considered an approach that is proactive by some, but is being hailed obtrusive by others. The bailed out banks Northern Rock and Bradford & Bingley are planning to carry out credit checks on existing mortgage customers to assess their financial situations and will be contacting anyone that they consider to be at risk of defaulting to advise them to cut back on their spending.

Basically, the banks want to inform high risk customers that if the interest rate rises and they fall into arrears they could end up losing their homes, so they need to start cutting back on spending now in order to free up more income. They will be advised to reduce their spending on non-essentials and luxuries such as mobile phones, cable or satellite TV, going out, and spending on treats. There has been a mixed reaction from consumers and officials with regards to this approach.

One bank official said: “Some people won’t cope when interest rates rise, but for others there are remedies. They need to think about what is their most important debt. It is not their credit card or renewing their Sky subscription, or going out for the latest mobile technology. It is their mortgage. We want customers to look at their finances and change their behaviour.”

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Posted in: arrears,avoid,Banks,Controversy,mortgage,tactics

Mortgage pay-offs hit £7 BILLION high

Record amounts of money are being spent to repay mortgages and pay off other debts secured on their homes, according to the Bank of England.

Households managed to pay off £7 billion net of mortgage and other secured debt in the last three months of 2010, which is the highest net repayment ever seen in this country since records began in 1970. This will deal a crushing blow to the country’s economy, with new lending to first-time buyers on a massive low, little can be done to balance the depressing impact on the economy.The Bank's latest statistics on housing equity withdrawal show a steady ascent on the £6.6 billion paid off between July and September.The figures also include money paid as deposits by homebuyers.Lenders demanding higher deposits and rationing home loans would also increase the financial stake that homeowners have in their properties.During the boom, people used extra mortgage borrowing to cover other spending.Kevin Still, Director of Atlantic Financial Management, said: “For those UK consumers with surplus cash at month end, clearing debts appears to be sensible with the average level of unsecured debt for people using credit continuing to fall through the recession. This has dropped from £21,640 in April 2009 to £16,207 in April 2011, according to Credit Action. From July 1998 to March 2008 homeowners borrowed an extra £328 billion against the rising value of their homes.Kevin continued: “What is of concern is those homeowners reliant on low interest rates and who are facing an increasing squeeze on their disposable income with the budget compounding this to create more debt problems. Leading debt analyst TDX has recently forecast a rise in informal debt solutions like Debt Management Plans (DMPs) in the second half of 2011.” As a percentage of incomes, the net pay-off of debt in the three months of 2010 was also at a near record 2.7 per cent, a shade behind the 2.8 per cent of income paid off in the last months of 2008, in the midst of the credit crunch.The Bank commented that "weakness in housing equity withdrawal continues to be driven by the relative weakness of lending compared with resilience in housing investment".According to the Independent, the British Chambers of Commerce (BCC) says that the "overall picture is worrying", with the soaring cost of raw materials squeezing profit margins and confidence. The BCC says that the conclusion of its poll of 6,000 firms shows an outlook "mediocre and disappointing, particularly for manufacturing". It predicts that the economic upturn in the first quarter of this year will just about compensate for the fall in output at the end of last year. Bad weather and the VAT increase have been blamed for the lack of business cash flow.David Frost, the director-general of the BCC, said: "While the Government has listened to calls to help the private sector create growth, there is more to be done in giving businesses greater confidence, and encouraging them to export, invest and create more jobs. As the public sector cuts start to bite, the Government must get the detail right on the measures announced in the Budget to generate economic growth."
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Wednesday 11th August 2010

Bankrupt football legend probed by police over loan fraud
Monday 2nd August 2010

Mortgage broker ordered to repay £1.5m of client money used to pay off debts
Wednesday 14th July 2010

Barclays lifts lid on banking write-offs
Wednesday 20th February 2008

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Posted in: Billion,mortgage,payoffs

Mortgage approvals fall 13%

The UK mortgage market started the year in rocky fashion with lending down by 13% in January from December.

The £9.2 billion advanced to homebuyers last month, down from the £10.6 billion lent in December, was still 5% higher than the amount lent last January, according to the Council of Mortgage Lenders (CML).

The lending figures are the lowest since February of last year and reflect the “sluggish” nature of the UK economy as a whole and a general lack in demand.

The month-on-month fall is likely to have been caused, at least in part, by the arctic weather conditions in December that prevented many house hunters from viewing properties.

The CML data is compiled from figures supplied by banks, building societies and other lenders who make up some 94% of the UK residential mortgage market.

Stricter lending criteria, a general lack of confidence in the market and mortgage providers asking for higher deposits are also keeping approvals down and are likely to constrain the market for some months to come.

Earlier in the week, the CML said that a typical mortgage required a deposit of some £12,700 at the start of 2007, which rose to £31,500 by the second half of last year.

Peter Charles, an economist at the CML, said that he year-on-year increase was distorted by lower than expected levels of activity last January as reluctant buyers were put off entering the housing market when the stamp duty holiday came to an end.

He said that mortgage providers are unlikely to lift lending restrictions any time soon and will continue to focus on less risky customers with high deposits.

“There is little likelihood of any significant improvement in the mortgage market through the course of this year. In consequence, it is difficult to see much improvement in opportunities for first-time buyers,” he said.

“The Bank of England’s Inflation Report this week noted that the UK banks face a significant funding challenge over the next couple of years: in total, including funding supported by the public support schemes, around £400 billion to £500 billion of wholesale term debt is due to mature by the end of 2012. This implies that, even in the unlikely event of a marked upturn in mortgage demand, the level of activity in the mortgage market can be expected to remain constrained.

“As a greater degree of equilibrium is restored to financial markets, the availability of funding for mortgage lending should improve from current levels to support more normal levels of activity. However, the unprecedented expansion of wholesale funding, and hence mortgage lending, experienced in the mid 2000s is unlikely to return.”

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Posted in: approvals,mortgage

Rising student debts will affect mortgage affordability

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Posted in: affect,affordability,debts,mortgage,Rising,student

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We aim to reduce debt in the shortest possible time. We are members of DEMSA - (The Debt Managers Standards Association). We adhere to the code of conduct as set out by DEMSA which aims to protect the interests of both consumers and lenders. The DEMSA code of practice is approved under the OFT (Office of Fair Trading) Consumer Codes Approval Scheme (CCAS).

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Posted in: lending,mortgage,Static