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The meaning of Future: Effective in or looking toward the future. Hmm, for some Future is the future, for many more, future only disrupts and destroys the future, well the foreseeable anyway. Although they serve their purpose in the sub prime mortgage industry (at a hideous cost) most of my experience of Future while I worked in the industry was seeing yet another sub prime lender "home in on consumers who are financially stuck or lacking the standard criteria to go to high street such as on insufficient income, mainly benefits as income, poor credit rating or self employed, they love the ones "without accounts". All the consumers who are generally more at risk of not making their payments anyway, again due to many factors such as quiet weeks with little work coming in, less income than usual, perhaps no bonus paid that month on top of the fact you can barely afford it, even on the good months. Especially if you have poor credit and the lender already knows that judging by past payment behaviour, especially when they look over the last 12 months say, they probably sit on their leather chairs with big fat cigars in their mouths thinking of new strategies to get more business, with the result probably being, " just think, these people here with the odd missed payment and maybe one arrear, they're obviously having difficulties, temporarily we can consolidate their debts, cut their initial payment then rack up the rate, that way we will have helped at first, but then we ended raking in the interest and if we are lucky the late payment charges and more interest on that, bonus if we get the house!" Sounds harsh doesn't it and I probably shouldn't focus that spiel at just Future, but probably almost every sub prime lender out there has that vision at the back of them mind. Don't get me wrong, they all serve their purpose, lending to anyone who needs help securing a mortgage without the credit rating or without the income and at the time they build dreams, but most often and not, the dream doesn't last.
Of course, if a lender can deal with people with poor credit ratings, usually to a point where it's pretty bad, this comes at a price in more than ways than one. So many lending restrictions and expensive add ons and charges before you even get the offer and this is just because they are lending to those who either have mucked or are at a high risk of doing so, hence the need to go to the sub prime market. The only usual reason for using a sub prime lender if you have good credit rating coupled with sufficient finances to pay sensible for your mortgage is if a mortgage broker has pushed you, the innocent gullible high street consumer into "consolidating" and moving over to the dark side. Many a time have I seen people with their finances in touch but once they have been giving the savings breakdown, without really thinking about the fact their broker has doubled the term on it (years paying it over) or the 4% discount for one year, shooting right back to the standard interest rate of 7.5% no sooner has the 365th day passed.
These add ons include (for simply falling into the sub prime market):
- Lower LTV on offer - Loan To Value, for instance on the high street you can borrow 100%, sometimes more of the properties value, whereas sub prime usually will go to 85% or 90% if you're luck (though not at the current state of the market, more like 80%), and if you do dare go over 90% god help you with the monthly payments, they see the lend as a risk, at 100% with repossession and brokers fees, the lender won't even recuperate their original loan, hence the high interest rate. As a business goes, they do need to preserve their business and money on loan but really at such a high and usually crippling rate?? - The high interest rate - as explained above, the risk vs the price of the loan, the risk usually wins. - Future mortgages usually go through the "very" helpful broker and indeed he is always paid a "very" nice fee for the deal, usually up to 3k after a 60k + mortgage, sometimes more if they push. They offer better discount deals to the broker so they can entice the consumer to move over, usually done by telesales calls half way through the night, to people they have found on data that has been collated from many a source, whether it be consumers with poor credit or the poor people who forgot to tick the 3rd party box on the credit card they applied for 5yrs ago. - High Redemption Penalties (the payment due if you leave within the set fixed period, or first 3 yrs usually with a sub prime lender if not). That way, they get to ensure if you do realise the mistake of taking a huge 1yr discount rate that expires leaving you with a substantially higher rate, you will more than likely still have to pay the 6% redemption penalties which is Futures standard redemption rate, if you are lucky you may get a sideling scale, 1st yr -6%, 2nd yr 5% and the 3rd being 4% but irrelevant, 4% of a 100% mortgage is a whooping £4000, which will instantly be added to the top of your mortgage. Many people have difficulties deciding whether to sit out the further 2yrs of high usually variable rates till the penalty clause ceases and stomach the payments or do they bite the bullet and take the 4k charge on top of probably another 3k broker fee and pay if over 25yrs, neither option is favourable. This is yet another pit fall to the lender, you just won't ever get your balance down. What with the interest rate, higher payments and charges and more, you will forever sink in the sub prime market, being robbed at every pillar and post, another lender "saving you this time", only to add more on the balance that doesn't seem to be getting smaller, even though the term of the remaining years stretches and stretches till before you know it and I have seen it many times, the poor customer will be 75 by the time they have paid their mortgage and that without taking into consideration the 10k second charge they have on the house for "home improvements" which never materialise and with more equity disappearing and the payments seeming more often, the future is often bleak. - How long will Future be your future? Many sub prime lenders, Future included tend to sell their mortgage accounts, willy nilly, one minute you are with Future, the next minute you have been sold to a company which you specifically choose not to lend with. Not only is it totally cheeky, but you always end up with higher payments and when you choose to read the small print of the smaller section of the contract (how often do you read them eh?) you see that right before your eyes you have signed that you are happy for this to go ahead, rarely pointed out is it, like all of the above in fact. To justify their add ons and ridiculous rates, they rarely ever mention these facts, just the payments for the first year. - 3 and you're out - Not always the case but the generally proceedings for Future's repossession court order would get submitted after the 3rd consecutive missed payment or indeed, say 4/6 months. All the time the interest and late payments are increasing your mortgage by a 1k a month, even though they want a monthly payment of £1352. At this point I don't think the consumer is expected to win.
The future is set, you either lose the house or if you are lucky and have equity, you would probably need 20% of the property free And maybe a bit more, maybe you will lucky enough that Future call you on a grisly Friday night when you're sitting in the house, no money to go out and another dreary weekend ahead. BUT ALAS, YOUR KNIGHT IN SHINING ARMOUR HAS ARRIVED. . . . There's this great chap on the phone, working for a broker who "specialises in reducing your monthly outgoings while clearing your arrears and still give you 12k left over to clear the credit cards and pay for the well deserved holiday. It doesn't matter that your income doesn't quite stretch and they take WFTC credit too or disability allowance (payments allocated from the government which shouldn't be to cover the mortgage, for other necessities, for the kids etc). And by the time they slip in the broker fee of 3k plus the valuation and your previous redemption figure, it seems a minor fact compared to the "New Start", the FUTURE.
Whether it be Future that saves you or another sub prime lender just remember, they are only in business, they screw those who allow themselves to be screwed. People who have no option can be helped, don't get more wrong and providing you can make the fixed rate payments, you could even manage to get your self back on the high street after the 3yrs if you are lucky, just in time for the redemption penalty to end, gaining yourself a more stable financial future and far more competitive rates and you also know where to go if it doesn't pan out, there's always another FUTURE mortgage on offer.