My submission

P

Popper

Registered User
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26
Here was mine:
1. The recourse limit on all home mortgages should be 80% LTV
2. 3.5 times salary should be the normal limit on the loan.
3. There should be an onus on lenders to show all due diligence in verifying documentation produced by lenders and agents as to claimed income, and to the provenance of the deposit.
4. Subject to the lender being able to show due diligence, and the absence of fraud on the part of the lender, any part of a mortgage exceeding the 80% LTV should be non-recourse, not only against the mortgaged property, but also against any other property owned by the mortgagor or any 3rd party, directly or indirectly.
5. Where all or part of the deposit derives from a personal loan or is the subject of a repayment-guarantee (or the borrower cannot show the provenance of the deposit in the due diligence process) the 3.5 times salary limit shall be reduced by a formula to maintain the loan to repayments ratio.
6. No new home mortgage shall be for a term exceeding 27 years, or extend beyond the 65th birthday of the borrower.
7. The 80% recourse limit shall decline by a sliding scale after the borrower reaches the age of 50, to 20% when the borrower reaches 60.
 
6. No new home mortgage shall be for a term exceeding 27 years, or extend beyond the 65th birthday of the borrower.
7. The 80% recourse limit shall decline by a sliding scale after the borrower reaches the age of 50, to 20% when the borrower reaches 60.
Click to expand...

Hi Popper

Glad to see someone else is making a submission and is sharing it with us.

What is your rationale for these two suggestions?

Brendan
 
What lending regime might the banks adopt if the mortgage holder could hand the keys to the bank at any time, nullifying the mortgage (assuming the house is in a reasonable state of repair)?
 
Hi Brendan,

1. Extending the mortgage term is no different in its inflationary effect from increasing the LTV. The 27 and 65 are admittedly arbitrary limits - but given that some limit should be imposed, and almost all first time mortgages are taken out before the borrower is 37, and extending mortgages into retirement age when most people are on very reduced incomes seems a bad idea, I have chosen those limits. Perhaps you might suggest an alternative logic.

2. Again, the logic is to help avoid the risk of carrying major mortgage liability into retirement. I suppose I'm thinking of friends in their late 50s who saw their jobs go, equity in their homes vanish, and their pension funds go down the flusheroo because of the crash. Retirement security destroyed, and too late in their lives to recover.
 
Popper

I echo your sentiment on people bringing debt into retirement. In my opinion, it's the biggest mistake they can make at retirement.

I have seen people have miserable retirements because their debt repayments too such a massive percentage of their now reduced income.


Steven
www.bluewaterfp.ie
 
In fact, I'd be tempted to impose a 20 year limit on 80% of mortgages! with a further 15% limited to 25 yrs, and only 5% allowed run to 27yrs.
 
Why the 65th birthday? Isn't retirement around 67/68 at present?
Interesting documentary on BBC a couple of years ago. By 2020 12% of the workers in the UK will be 70 or over. Could be the same here.
 
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