As if it’s not currently hard enough in the housing market lenders appear to be making things a little bit harder to keep things moving. The Financial Ombudsman Service has received a growing number of complaints from customers who have been unable to transfer their current mortgage to a new property.
Typically if a home owner’s mortgage is “portable” they can transfer both the mortgage rate and the terms to a new property, as long as they are not borrowing more money. In reality though a “portable” mortgage still requires the lender to carry out a full “affordability” check, as if the home owner were a new customer, the problem this raises is that the current lending criteria is much stricter than it was several years ago and, depending on whether a homeowner’s circumstances have changed, this could mean that lenders will refuse to transfer the mortgage to a new property. The problem then is that the home owner is left with two options:
1. Pay the early redemption charges in order to secure a new deal with a new lender, or
2. Stay put.
Unfortunately the latter will mean that the housing market is hit even harder as fewer home owners are in a position to move home.
Each lender has a different rule for porting, for example both Northern Rock and Bradford & Bingley will refuse a customer’s request to port if they propose to take a further advance, effectively forcing customers to down size.
What are the knock-on effects that lender refusal of porting will have on the current market?
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