The last few months have seen lenders improving their criteria for homeowners, and in particular some of the groups who have struggled in recent years to secure a mortgage.
The Financial Times looked this weekend at the options, other than equity release, that are opening up for older borrowers, now that mainstream lenders are beginning to respond to demand by extending the maximum age a mortgage can be taken up to. This could prove to be a lifeline for borrowers who are considered to be mortgage prisoners – such as interest only borrowers looking to switch some or all of their mortgage to repayment but require a longer term to do so.
First-Time Buyers and the self-employed have also traditionally been groups who have easily fallen foul of tougher lending criteria, but the Mail on Sunday reported on improvements in these areas too.
There was also news that some lenders are considering a new type of mortgage designed specifically for couples separating. The ‘divorce mortgage’ would provide a lump sum for a set period of time, allowing someone to buy their partner out and remain in the marital home. At the end of the set period the borrower would be given the option to sell and repay the loan, or take on a full mortgage if they are able.
By midweek there was news of a Government consultation which plans to make switching bank accounts, utilities, and even mortgages easier for consumers. Critics argued however that a 7-day turnaround for mortgage switching is not a realistic target, due to the amount of work required in confirming affordability and credit-worthiness, as well as valuing the property and carrying out any necessary legal work. Currently borrowers are advised to allow 3 months for a transfer to take place.
What the papers said about changes to lending criteria