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LETTERS


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When lenders have a great deal


why wouldn’t they want to keep it for Mr and Mrs Squeaky Clean? You can’t blame them, can you? DAVID SELLENBY


Congratulations to Woolwich and RBS for sensible changes


I would like to offer my thanks to Woolwich for listening to broker feedback in relation to its funds booking system. Intermediaries can now secure funding from 10am rather than midnight. The lender is also splitting its single tranche of funding into residential and buy-to-let cases and removing the funding limits for mortgage networks and clubs. While not an advocate of it, the


changes are sensible and will make brokers’ lives easier. I would also like to congratulate


the Royal Bank of Scotland for its recent interest-only changes. There is a place for interest-only


in the market and while some will disagree, the stance taken by RBS is positive compared with other lenders’. Interest-only is a niche product so a first-time buyer on an average income – £26,244 in 2011 – should be taking out a capital and interest mortgage. With the odd exception this


typical purchaser will not see a huge rise in income or necessarily be fortunate to have substantial bonus-earning potential, therefore they have no means to repay an interest-only mortgage. The odd exception would be


professionals who will see a significant increase in salary and


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lenders may wish to consider an interest-only policy for this bracket. RBS’ criteria is sensible and


logical, although I disagree with the policy that applicants must have their salary credited to an RBS bank account for the previous three months. It is clearly happy to lend on


an interest-only basis to those with an income of £50,000 and an appropriate investment vehicle. For those with earnings of more than £100,000 it will consider other repayment strategies, such as bonuses, stocks and shares. RBS has given some thought to its criteria and not acted like another one of the flock. I hope other lenders reconsider or take this into account when reviewing their own criteria. Finally, I would like to remind


lenders that in the 1990s they generally threw their weight behind recommending endowment plans as being the most appropriate means of repaying a mortgage. It cannot be right to advise this


to borrowers at one point because it suited them and now to say that the method is unacceptable. Borrowers who can provide


evidence of their endowment should have the option of getting a mortgage regardless of LTV. COLIN PAYNE


ASSOCIATE DIRECTOR CHAPELGATE ASSOCIATES


Interest-only works for me even without a repayment vehicle


I was interested to read the research from Unbiased.co.uk on


NewBuy closed shop is nothing short of blackmailing clients


In response to Mortgage Strategy’s lead story last week about how lenders are only offering their 95% LTV NewBuy Guarantee products


Mortgage Strategy Online recently that some 1.6 million home owners are simply paying off the interest each month and not repaying capital or saving anything towards paying off their mortgage debt in the future. This was described by Unbiased as a ticking time bomb. I have an interest-only mortgage


without a repayment vehicle. Alas, I had to stop my ISA in


2008 when my income dropped by 40%.


With things getting a little better financially, I am now focussing on repaying all my unsecured credit.


After this is complete, I intend


to restart the ISA when the market picks up, whenever that might be. But I am aware that at present I


am not repaying what I owe. While I am therefore effectively


renting, the repayments equate to paying around 65% of market rent and allows my family to live in a great area with good schools. In the worst case scenario, I


will sell my property in a few years and take my couple of hundred thousand equity and buy somewhere cheaper, once the kids have moved on.


Can someone explain where this falls down? NAME AND ADDRESS SUPPLIED


to a small number of brokers, there can’t be any broker who is surprised by this. New home deals have always


been a closed shop to small brokers, irrespective of whether a client would prefer to deal with them or not.


Just like most estate agency


brokerages, it’s nothing short of blackmailing clients. The obvious implication for customers in this type of scenario is that if they don’t deal with the estate agent’s broker they can’t buy the house. It’s appalling but has always


been there. Bravo to Nationwide whose


NewBuy scheme is at least open to all intermediaries – it’s an oasis in the desert at the moment. STEVE MCGILL


It is OK to cut proc fees if savings are passed to customers


With regard to the decisions by Lloyds Banking Group and Nationwide last week to cut proc fees to directly authorised brokers, I have no problem with lenders cutting proc fees if the savings are going to be passed on to consumers. Advisers already have great


analytic scope and unless lenders offer each other’s products across a whole-of-market advice model they won’t be able to compete. The proc fee always will be the


last box ticked when I am researching the most suitable mortgages for my clients.


HARRY MOORE


MORTGAGE STRATEGY April 9, 2012


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