mortgage difficulties

Hi @loulou123,

Thanks for posting. What you've told me pretty much backs up what I've been finding in my work. Lending has tightened up considerably since the financial crisis back in 2008. There have been so many changes to the welfare system too and benefits aren't considered a stable income now with most benefits subject to changes and reassessments. This makes it's very difficult to pass the mortgage affordability tests which were introduced back in 2014. Lenders have to lend responsibly now, it's the law so they have to scrutinise affordability, not only at the time of the mortgage application but further along in the future. They will apply various stress tests to assess the applicant's ability to sustain the mortgage. This includes things like interest rates rising and other income shocks. 

What concerns me most is the change coming to Support for Mortgage interest (SMI) in April 2018. SMI is the benefit which contributes to the interest payments on a mortgage when the claimant is unable to work due to illness, disability or is unemployed and in receipt of means tested benefits such as income related ESA, Income Support and income related JSA. SMI will change from a benefit to a loan. All existing claimants in receipt of SMI will need to start planning for this change coming in 2018. They need to work out whether they will continue to receive help through Loans for Mortgages with the idea that the loan is repaid if'/when the claimant is able to return to work or a charge secured on the property so that the loan is repaid when the property is sold. Any SMI they've claimed before the changes in 2018 won't have to be paid back but help they receive after will. SMI is important because it is a vital safety net and is often a last form of defence in possession proceedings. Lenders have shown an incredible amount of forbearance over the years but I wonder how long this will continue when such vital support is changed.

What I'm finding from working on the front line is that shared ownership comes with its own problems. It can be really difficult to find shared ownership properties, of course this varies from one area to another but generally speaking it's a really competitive market and there aren't enough properties to satisfy demand. I've been researching HOLD for a while now too. HOLD is home ownership for people with long term disabilities; It's a shared ownership scheme which allows a registered housing provider to apply for funding to purchase a suitable property on the open market. HOLD is very difficult to find and is even more difficult to access due to the lack of lending available.

It's all pretty bleak so if anyone has a success story they would like to share with me, I'm keen to hear from you.

Many thanks
Debbie