Mortgages And Remortgages Before And Since The Credit Crisis.

A remortgage as everyone knows is a home loan product and what it in fact is is the rearranging of a mortgage thet currently exists on a property.

Only homeowners can obtain a remortgage or a mortgage as they are both loans that need the asset of a property.

This all lead to mortgages and remortgages being very readily advanced as they are secured loans, secured on the equity of the property

No matter what debts a homeowner has to pay each month on credit cards, personal loans, etc. A mortgage is the first debt that a homeowner pays, as a primary requisite in life is to have a nest in which to live.

Food and shelter are the most importaant aspects in life.

This certainty that mortgage lenders had that the mortgages and remortgages they advanced being repaid faithfully each month , and being certain that no one in their right mind would apply for a mortgage or a remortgage that they could not comfortably pay back.

All this lead to both remortgages and mortgages being granted often in rather a loose manner, with people in fact being granted mortgages to buy a bigger house than they could actually afford and the situation was the same with remortgages.

Perhaps the mortgage and remortgage lenders badly misjudged human nature thinking that the facts provided on their application forms were in fact accurate, when in fact this was often not the case.

It was usual for self employed applicants to declare their own income without providing any proof of earnings when arranging a remortgage or mortgage.

It is natural to want a nice home and a self employed applicant could lie about his earnings to buy thedream property.

A self employred applicant wrote his net profit on a letter head, and sometimes the true earnings were not stated.

Some took out a remortgages to pay Inland Revenue and VAT arrears.

This often lead to mortgage arrears and we are witnessing this at present.

Now when applying for a remortgages or mortgages the prospective borrower if self employed must produce at least an accountant’s letter or even two years full acounts.

Many homeowners are in a situation of having mortgage arrears through no fault of their own due to having taken out a home loan that they could comfortably afford at the time, and having been made redundant they can no longer afford.

On applications in the past, many would be remortgage borrowers under declared the amount they spent each month on financial outgoings such as food, utility bills, etc, and as a direct result, borrowers must now produce three months bank statements to categorically prove what they spend each month on these items.

All this tightening up of criteria should help make sure that the person applying for a remortgage or a mortgage can afford to comfortably afford it.