He and she are divorcing. They own a house that she wants to keep, but he wants his money out of it so he can buy another house. What to do? The Yorkshire Building Society in the UK has the answer: use its “Fresh Start” mortgage to borrow the full value of the home, with no interest for the first six months, a Â£400 cash rebate for legal expenses, and referral to a divorce lawyer.
Here are a few articles about the product:
I realize that I use this blog to do a lot of harumphing, but allow me to harumph loudly about this cynical salvo in the lending wars. No! No!
People who are divorcing too often try to hold on to their home, when they need to reduce their debt and simplify their life. The target customer for this new loan is a wife who wants to keep the house for the children but can’t qualify for a loan under normal underwriting principles. Along comes Yorkshire and says that’s not a problem; we’ll just give you a loan on which you can’t afford to make the payments.
So this hapless, hopeful divorcing mother gets her house. She enjoys the first six months of interest free financing, and then the hammer falls. She’s living in a neighborhood she can’t afford (so that her children want clothes, toys, and trips their friends enjoy but she can’t afford), she’s forced to make a mortgage payment she can’t afford, and her ex-husband got all the cash out of the house.
Yorkshire says a portion of its package is referral to a financial planner. If there is God, that financial planner will have the guts and integrity to tell that poor woman to walk away now.
Okay, climbing down off my soapbox now.