New rules, and even some old rules that are being revisited, are turning the mortgage process into an even more daunting task than usual this year.
Bank funds are tight, but as borrowers are discovering, the banks are also tightening up on the terms and conditions of their loans: down payment limits are being strictly enforced, with little or no leeway for even the smallest shortfalls.
Applicants who haven’t earned and saved the down payment from their own resources are being rejected and income to debt multiplies have fallen back to the historic mean,
Borrowers, in many cases, are being told they cannot borrow more than three times their salaries.
The other area that lenders are tightening up concerns the insurance that mortgage holders are obliged to carry.
A fortnight ago, one of the biggest mortgage lenders in the state, Permanent TSB sent out a circular to their intermediary network in which they stated the following:
“In today’s economic climate, many customers are cutting back on spending what they consider to be unnecessary costs. Our statistics show that one of the items considered for cut back is the monthly Life Assurance payment.
“This poses a significant risk to both the customer and the bank. In the event of the death of a borrower there is the risk that the mortgage will remain unpaid, or that the remaining borrowers will be unable to repay the mortgage.
“In response to this, we have decided to start assigning life policies again with immediate effect.
“All Loan Approvals now include a condition specific to the relevant assignment required, and a copy of the assignment document. It is now a requirement to submit the original life policy prior to cheque issue.”
Clearly, there has been a breakdown in the ‘assignment’ process.
See The Munster Express newspaper for full story or subscribe to our PDF version.