This is how banks make money without lending:

 

1. put out a really attractive mortgage offer to us desperate borrowers
2. agree decision in principles (DIPs) with applicants confirming they will lend subject to a suitable property being found
3. charge a non-refundable application fee of 599
4. charge 395 for a survey (which costs them less than 100)
5. have a word with the surveyor going out to steer on the side of caution
6. down value the property by 10% or more (see previous article)
7. hope the applicant pulls out (90% of applicants will)
8. bank makes 599 + profit on survey (295) = 900 approx per applicant.

 

Banks win, you lose.

 

It is slowly coming to light the bank's unscrupulous practices:

 

1. unfair bank charges
2. unfair mortgage fees

 

Soon it will be their rip off practices on genuine borrowers.  All I can say is hang on in there.  There are good banks and bad banks.  We keep track of the time-wasting banks and try to avoid them as best we can.  However it is a real hazard in todays market.

 

It might take another harsh chat by Mr Darling which will kick them back in to touch but in the meantime tread with caution.

 

Ajay

 

Posted on: 9th Aug 2009