Fast Track Mortgages

by Mark Johnston

A few lenders still offer a fast track mortgage facility. This facility means the whole mortgage process is speeded up and they are also easier for borrowers as they do not have to prove their income.

A mortgage application has to meet certain criteria before it can be fast tracked, this is usually:

– Affordability is proven with in the affordability calculator and subject to credit score

– Customers must be employed, self employed for 2 years or retired

– The loan to value (LYV) is at least 75%

– If the client is a home owner the must have a good payment history (no arrears in the previous 12 months)

– The maximum loan is £500,000

Right to buy and shared ownership schemes are not eligible for a fast track mortgage, neither is any customer who has ever been bankrupt.

The Financial Services Authority (FSA) last year launched draft proposals as part of its review of the mortgage market. These proposals included the requirement that all lenders check all borrowers’ income and therefore they suggested banning fast track loans.

In light of this review some mortgage brokers have stopped using these facilities, such as recently Mortgage Intelligence is no longer using Santander’s fast track facility.

Sally Laker, managing director of Mortgage Intelligence Holdings said of this decision “we continually review our product range to ensure our offering meets the needs of our many broker members, while being a strong advocate for quality in the broker industry. Following consultation, we have chosen to opt out of the fast track process”.

It seems that Legal & General has also announced that it is no longer offering its advisers the facility.

However, some industry sources believe that the regulator is likely to back track on banning these fast track loans before the final draft of the Mortgage Market Review in autumn this year.

This ‘change of heart’ may be due to the fact that many lenders have provided new evidence that now shows that fast track loans are performing better and have lower levels of default than income verified mortgages.

It does seem in part due to the fact that banks have tightened up their criteria for fast track loans, which is likely to make the difference in performance.

Ray Boulger, of John Charcol, a mortgage broker, feels optimistic that the Financial Service Authority (FSA) will back track on their decision to ban fast track facilities and he stated that “the evidence in favour of allowing fast track to continue, in my view, is pretty overwhelming”.

The Council of Mortgage Lenders (CML) has warned that banning fast track could increase the costs for lenders, which will ultimately be then past on to the consumer.

Sue Anderson of the Council of Mortgage Lenders (CML) said “the evidence is clear that fast track has proved to be a very effective and high performance sector”.

The Financial Service Authority (FSA) has not commented specifically on fast track but it has stated that the proposals are ‘not yet final’.

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