Mortgage lending end of self cert.
Discussion
Now this is very deppressing for the housing market and life in general,add this to the stringent credit check scoring system it will soon be impossibe to get your foot on the housing ladder,miss a payment on your mobile phone and you have blown it anyway,and even if you qualify for application dont expect to have an increase in value any time soon,possibly lenders will for the first time build in depreciation,increase in energy costs,decreases in child benefit ect ,increases in interest rates,and fuel to lending criteria,oh and dont bother applying if your 50ish,mind you they reckon most first time buyers are now 38 I see dark days ahead for the property market.
End of self cert is the killer blow though,any one self employed will find it very hard to borrow from 2013.
I feel the biggest threat to new borrowers will be unemployment thats where the danger lies.
sorry for any typos BB
G
End of self cert is the killer blow though,any one self employed will find it very hard to borrow from 2013.
I feel the biggest threat to new borrowers will be unemployment thats where the danger lies.
sorry for any typos BB
G
A return to sanity.
Self certification was a driver towards the lending madness that put us in the state we are in.
Good riddance, I say.
And there is no reason why the end of self certification should cause problems for those who run their own businesses. For decades, before the advent of self-certification, the self employed and those who ran their own limited companies were able to borrow - and that will still be the case.
Providing true and correct evidence of income should not ever be a problem.
Self certification was a driver towards the lending madness that put us in the state we are in.
Good riddance, I say.
And there is no reason why the end of self certification should cause problems for those who run their own businesses. For decades, before the advent of self-certification, the self employed and those who ran their own limited companies were able to borrow - and that will still be the case.
Providing true and correct evidence of income should not ever be a problem.
Edited by Eric Mc on Monday 19th December 10:07
I dont advocate the previous policy resulting in toxicity was correct,I am saying this change is yet another downard pressure on the economy going into the new year.
Mortgage lending needs stimulus for ovious reasons not further retraction IMO.People (who obviously can afford to)not moving,not changing their car,not going on holiday is not good for the economy.I know several very wealthy people who are cutting right back even shopping at Aldi etc,not condemming them just vocalisng an observation.
Mortgage lending needs stimulus for ovious reasons not further retraction IMO.People (who obviously can afford to)not moving,not changing their car,not going on holiday is not good for the economy.I know several very wealthy people who are cutting right back even shopping at Aldi etc,not condemming them just vocalisng an observation.
Justayellowbadge said:
Eric Mc said:
Providing true and correct evidence of income should not ever be a problem.
Difficult to reconcile that with an effective accountant that has managed to minimise one's income for years, for tax purposes.Can't have it both ways.
Are you implying that a business man/woman should prepare different sets of financial results depending on whether they are declaring income for tax purposes or applying for a loan?
Up until the mid 1990s, it was absolutely normal for potential lenders to ask for third party evidence of trading profits - usually by asking the applicant's accountant to supply at least three years sets of formal accounts AND copies of the Self Employed tax assessments that used to be issued by the Inland Revenue.
I am absolutely convinced that the inital move to Self Certification was partly brought about by the advent of the Self Assessment tax system. Under Self Assessment, in most cases HMRC never issues any form of agreed tax calculation or tax assessment. At one fell swoop, government policy removed one of the cornerstones of income verification of non-employed individuals.
We are seeing a return to the pre 2000s as far as verification of income is concerned and a new move is afoot for lenders to supply the income figures entered on a loan applicants form to HMRC for verification and reconciliation with the figures that have already been submitted on their tax returns.
Eric Mc said:
Are you implying that a business man/woman should prepare different sets of financial results depending on whether they are declaring income for tax purposes or applying for a loan?
Not at all. Just reminded of a couple of people I've known who have been rather smug about the fact they earn less than minimum wage, yet have remarkably comfortable existences. I would suspect they might be regretting the approach a tad if they have a requirement to remortgage..CaptainSlow said:
Self Cert has been off lenders' appetite for a few years now, quite rightly.
Self Cert is not the same as Self Employed.
It started life as a means for self-employed individuals to state their income - especially when the old Tax Assessment verification became impossible.Self Cert is not the same as Self Employed.
Its use expanded over the years to encompass virtually everybody - self-employed or employed (or even unemployed - in some extreme circumstances).
Justayellowbadge said:
Eric Mc said:
Are you implying that a business man/woman should prepare different sets of financial results depending on whether they are declaring income for tax purposes or applying for a loan?
Not at all. Just reminded of a couple of people I've known who have been rather smug about the fact they earn less than minimum wage, yet have remarkably comfortable existences. I would suspect they might be regretting the approach a tad if they have a requirement to remortgage..Eric Mc said:
Tough.
Can't have it both ways.
Are you implying that a business man/woman should prepare different sets of financial results depending on whether they are declaring income for tax purposes or applying for a loan?
Up until the mid 1990s, it was absolutely normal for potential lenders to ask for third party evidence of trading profits - usually by asking the applicant's accountant to supply at least three years sets of formal accounts AND copies of the Self Employed tax assessments that used to be issued by the Inland Revenue.
I am absolutely convinced that the inital move to Self Certification was partly brought about by the advent of the Self Assessment tax system. Under Self Assessment, in most cases HMRC never issues any form of agreed tax calculation or tax assessment. At one fell swoop, government policy removed one of the cornerstones of income verification of non-employed individuals.
We are seeing a return to the pre 2000s as far as verification of income is concerned and a new move is afoot for lenders to supply the income figures entered on a loan applicants form to HMRC for verification and reconciliation with the figures that have already been submitted on their tax returns.
Whilst thats great and right in reality you must admit this 100% dead cert only lending is going to suppress the housing market.Can't have it both ways.
Are you implying that a business man/woman should prepare different sets of financial results depending on whether they are declaring income for tax purposes or applying for a loan?
Up until the mid 1990s, it was absolutely normal for potential lenders to ask for third party evidence of trading profits - usually by asking the applicant's accountant to supply at least three years sets of formal accounts AND copies of the Self Employed tax assessments that used to be issued by the Inland Revenue.
I am absolutely convinced that the inital move to Self Certification was partly brought about by the advent of the Self Assessment tax system. Under Self Assessment, in most cases HMRC never issues any form of agreed tax calculation or tax assessment. At one fell swoop, government policy removed one of the cornerstones of income verification of non-employed individuals.
We are seeing a return to the pre 2000s as far as verification of income is concerned and a new move is afoot for lenders to supply the income figures entered on a loan applicants form to HMRC for verification and reconciliation with the figures that have already been submitted on their tax returns.
Overstating the HMRC check is pointless it is already checked.
As I said Im not talking about the morals just the effect.Same as sub prime lending on vehicle finance right wrong or otherwise its affected buisness badly.
IMO a tiered rate system is the way forward only lending to people that can PAY balanced against sensible risk at sensible rates, someone with one missed payment over the last 12mths isnt necessarily uncreditworthy IMO there arent enough blue chips left to keep the UK afloat.
Edited by Gary11 on Monday 19th December 10:53
Edited by Gary11 on Monday 19th December 10:55
Gary11 said:
Eric Mc said:
Tough.
Can't have it both ways.
Are you implying that a business man/woman should prepare different sets of financial results depending on whether they are declaring income for tax purposes or applying for a loan?
Up until the mid 1990s, it was absolutely normal for potential lenders to ask for third party evidence of trading profits - usually by asking the applicant's accountant to supply at least three years sets of formal accounts AND copies of the Self Employed tax assessments that used to be issued by the Inland Revenue.
I am absolutely convinced that the inital move to Self Certification was partly brought about by the advent of the Self Assessment tax system. Under Self Assessment, in most cases HMRC never issues any form of agreed tax calculation or tax assessment. At one fell swoop, government policy removed one of the cornerstones of income verification of non-employed individuals.
We are seeing a return to the pre 2000s as far as verification of income is concerned and a new move is afoot for lenders to supply the income figures entered on a loan applicants form to HMRC for verification and reconciliation with the figures that have already been submitted on their tax returns.
Whilst thats great and right in reality you must admit this 100% dead cert only lending is going to suppress the housing market.Can't have it both ways.
Are you implying that a business man/woman should prepare different sets of financial results depending on whether they are declaring income for tax purposes or applying for a loan?
Up until the mid 1990s, it was absolutely normal for potential lenders to ask for third party evidence of trading profits - usually by asking the applicant's accountant to supply at least three years sets of formal accounts AND copies of the Self Employed tax assessments that used to be issued by the Inland Revenue.
I am absolutely convinced that the inital move to Self Certification was partly brought about by the advent of the Self Assessment tax system. Under Self Assessment, in most cases HMRC never issues any form of agreed tax calculation or tax assessment. At one fell swoop, government policy removed one of the cornerstones of income verification of non-employed individuals.
We are seeing a return to the pre 2000s as far as verification of income is concerned and a new move is afoot for lenders to supply the income figures entered on a loan applicants form to HMRC for verification and reconciliation with the figures that have already been submitted on their tax returns.
As I said Im not talking about the morals just the effect.Same as sub prime lending on vehicle finance right wrong or otherwise its affected buisness badly.
It means values wont be inflated by "liar loans".
Therefore, if houses are more affordable, more transactions can happen.
Also, people who buy houses for more realistic values will have more cash to spend in the "real economy".
Also, if you wish to trade up, the next step will be smaller.
Guam said:
I have no personal issue with this either way, however I am getting absolutely PIG SICK of this all being laid at the consumers door here in the uk. Lets remind some of the holier than thou brigade out there and in here. The initial problem was American and contaminated the banking system due to greed and stupidity at the highest reaches of the Banking system. The current crisis as a result of the Stupidity and incompetence of governments.
Whatever the personal views of individuals about other individuals may be, the judgemental myopia that lays the blame endlessly at the door of the occassional idiot that over borrows is getting silly.
In most cases <the vast majority> self Cert was not a big deal. It was when the banks allowed it to get out of control it got silly.
I had a Self cert Mortgage now discharged <I suspect the vast majority were fine>, so where was the problem.
It seems that unless you were Fannie Mae or Freddie mac there wasnt that much of an issue prior to the crash!
Believe me, I'm on your side. In many cases, self certifications WERE truthful and affordable. The problem was that there were too many that were not. Just because you managed yours properly and cleared it correctly does not mean that the system was not flawed. Whatever the personal views of individuals about other individuals may be, the judgemental myopia that lays the blame endlessly at the door of the occassional idiot that over borrows is getting silly.
In most cases <the vast majority> self Cert was not a big deal. It was when the banks allowed it to get out of control it got silly.
I had a Self cert Mortgage now discharged <I suspect the vast majority were fine>, so where was the problem.
It seems that unless you were Fannie Mae or Freddie mac there wasnt that much of an issue prior to the crash!
The whole mortgage lending system became corrupted so that those who wanted to abuse it were pretty free to do so. It was bound to fall apart at some stage - as all investment bubbles funded by reckless lending are.
"Panorama" ran a very good investigative report on Self Certification around 2006 and it was blindingly obvious that there was massive abuise and corruption going on.
Oakey said:
Eric, as a graphic designer I can't begin to tell you the number of people I've worked with over the last 8 years or so who'd come to me wanting me to fraudulently knock up dodgy pay slips and the like in Photoshop so they could get mortgages.
Does not surprise me one iota.Muncher said:
I don't see this as making much difference at the moment, it's just going to prevent lending going mad in future.
It sounds like lending will just be based upon net salary after expenses, but at a far higher multiple than is used for gross salary.
Are you sure?It sounds like lending will just be based upon net salary after expenses, but at a far higher multiple than is used for gross salary.
A proprietor of a sole trading business does not have a "salary". He/she has a Net Profit after allowable business costs. It is on this Net Profit that the individual will be taxed. The Net Profit is, in effect, the equivalent of an employee's Gross Salary and this is the figure that would normally be looked at by a potential lender.
If the trader operates through a limited company, their personal income will probably be a combination of Gross Salary in the form of wages (just like an employee) and possibly a dividend payment. Salary evidence would be in the form of a P60 and dividend evidence would be in the form of a dividend certificate.
Both these figures could also be verified by the lender checking with the figures shown in the company's accounts and accounting records backed up with a third party verification, usually in the form of assurances from the company accountant.
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