With lenders all rushing to out do themselves on the sophistication of their affordability models and the lack of underwriters with any authority to take a common sense approach, we find ourselves in the bizarre situation of a £50,000 remortgage on a £300,000 value property more difficult to place than the first time buyer on 85% loan to value.
The focus seems to have swung totally towards earned income, which means that the retired 63 year old with a £50,000 mortgage who has been paying a repayment mortgage down for the last 10 years suddenly finds no one wants to lend to him because he only has a private pension of £10,000, plus a self employed hobby business earning him £3,000 per annum.
So, he has lots of equity in his property, has an excellent repayment record and can easily afford his £50,000 repayment mortgage. Yet he finds that he does fit the affordability criteria, so is left on a high standard variable rate. This cannot be right especially in a climate where we are supposed to be looking at risk averse lending, can it?