Monday, May 7, 2012

What Exactly Is A Fasttrack Mortgage And Who Is It Suitable for?

Fasttrack mortgages might seem like an simple way to a mortgage. But, what are they and how do they work?

In short, a fasttrack mortgage is one in which the building society does not demand that the borrower proves their income. It is faster than a normal application as payslips and other proofs of income do not need to be passed to the lender for their scrutiny.

Who is eligible?
Frequently the mortgage would be for less than 75% of the value of the property being purchased to be eligible for a fasttrack mortgage, but a few lenders are creeping this limit up to as high as 85%. But, merely because the mortgage counts as fasttrack, does not mean that you will never be asked to prove their income.

Fasttrack is not self-certified
A fasttrack mortgage should not be confused with self-cert mortgages or other be considered to be a loan that you can get without any form or proof of an income. At any time between application and completion, your bank might demand proof of income and a failure to be able to prove your income could result in a refused application.

A proof of income is still a requirement
And just because your loan to value rate is sufficiently low and your credit rating high enough and you are offered a fasttrack mortgage, it does not mean that you will never have to prove your income. Plenty of lenders are now protecting their own backs by instead of getting borrowers to prove their income to the lender, they demand that the mortgage broker who is dealing with the application checks the level of income.

So even with a fasttrack mortgage you are likely to still have to prove your income and the only real saving is to the building society offering you the loan. Instead of them having to confirm that you do earn enough to cover the loan, they just get a tick in a box from the broker, who has done all of the checking on their behalf.

Who could benefit?
Who then, may benefit from a fasttrack mortgage? Well, it is very difficult to say really. You need to be putting down a sufficient deposit to be eligible and then also have a very good credit rating. So, you need to be good for the loan.

You do have to be able to prove that your income is sufficient to cover the loan, in case you are one of the random group of people that the building society will check the income status of, or in case your broker is expected to verify your income.

Really, to be eligible you must be one of the eligible customers for any other type of mortgage that is on the market.

The fasttrack saving
The just real saving to you as a buyer is that the application may run slightly quicker because the income details are not passed to the bank, just a confirmation that you are earning enough. That is why it is a fasttrack mortgage, but the saving in time may not be that great.

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