Some mortgage lenders paying off borrowers to refinance
July 10, 2009
According to a recent report a number of UK lenders are actually giving customers money to try and get them to refinance with another lender.
Some lenders are said to be paying of their mortgage customers in a bid to get them to refinance elsewhere, as the struggles within the financial and mortgage industries continue. The report claims that some lenders may be paying tens of thousands of pounds to get borrowers to quit their mortgages and go elsewhere.
The situation has gradually got worse for many struggling lenders, who have had to find ways to try and wind down their lending books. Previously many were simply letting customers off paying early redemption fees in order to get them to quit their mortgage and move to another lender.
However, many of these companies have now had to find alternative ways to make this happen, and for some it has meant not just giving up a fortune on waived redemption fees but also paying out a fortune to get rid of their mortgage borrowers.
One housing development finance spokesperson spoke about the scale of the payoffs that some lenders were having to offer to some mortgage customers in order to get them to quit their mortgage and go elsewhere, and some have had to pay hundreds of thousands of pounds.
The industry official, from Knight Frank Finance, said: “We have heard of people receiving payments of as much as £400,000 on some larger mortgages around the £2m mark. Firms are having to make payments to borrowers to bring their loan to value numbers into line. If they don’t, they’ll be saddled with these mortgages for much longer than they want.”
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