Porting Existing Loans

It is nearly a year since the new mortgage regulations were introduced. The regulations changed significantly the way lenders assessed new borrowers, and imposed stringent new affordability rules. Where the system is falling down however, is when borrowers try to port their existing mortgages and lenders impose the new lending criteria upon them. This is forcing many to stay in their homes rather than move, and also can mean that they are trapped in an expensive loan with no way out.
 
In short many homeowners are now finding it impossible to achieve the following–
 
• Moving home
• Remortgaging
• Switching to a cheaper rate.
 
When banks are refusing to help porting existing loans and give borrowers new arrangements, they claim borrowers fail to meet the new affordability criteria. This in some instances may be true, but the banks are not legally required to enforce the new rules on existing lenders, and in fact the legislation provided for exactly this scenario.
 
The Financial Conduct Authority (FCA), made sure that there were transitional arrangements in place to protect existing borrowers from the reforms. However, as the arrangements were purely advisory the banks have been able to ignore the arrangements. It is hoped however, due to the failure of the current guidelines that this protection for existing borrowers will become binding rather than advisory.
 

To clarify the existing guidance from the FSA

All existing borrowers who don’t want to make changes to their existing loan, such as borrowing more money or extend the term, should not be subjected to the new affordability rules. This is because they took out their loan when the rules were more relaxed.
 
Sadly, it all sounds like another way for banks to make money from their customers – trapping them in expensive mortgages or forcing them to pay much higher fees and interest rates to obtain a new mortgage.
 
At Atpledge, you can always be sure of being fairly treated and know that we will do everything we can to help you rather than hinder you with your secured loan requirements.
 


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