My mortgage woes.....

I popped into the Royal Bank of Scotland on Saturday to enquire about whether they plan to reintroduce a 95% or 100% mortgage in the near future. Alas, the answer was a rather definite no. I spoke to one of the managers in the branch who told me that the days of lending that type of mortgage have gone, if not for ever than certainly for the forseeable future. He also explained that the maximum mortgage they would do on a house under 3 years old is 75% and they will no longer allow someone to make up the remaining part of the mortgage with a loan from a financial institution, something they were inclined to turn a blind eye to in the past.

Why do I tell you this, I hear you say?

Well, it is the "credit crunch" affecting the person on the street. Only a few years ago, someone like myself, with a decent, secure salary, would have been exactly the type of person a bank would be looking at. Multiples of salary of 4 or 5, even 6 or 7, were commonplace as people were encouraged to take out ever increasing mortgages to pay the ever increasing house prices. With the banking crash, all that has come to an end and despite the average house price tumbling to a much more reasonable level, the problem is that banks are imposing more stringent lending criteria.

Gordon Brown himself has stated that "never again should banks and credit card companies encourage you to borrow more than you can realistically afford to repay" and that "we need much tougher rules to make sure that high loan-to-value or high loan-to-income mortgages are offered only when the lender has done rigorous checks to ensure people can keep up repayments."

I suppose to get a deposit together, I have to return to the thing my parents and their parents had to do in days gone by.....save!