The Irony of Remortgages By Michael Sterios At Isnare.com Ezine Articles

Recent news has emerged regarding the staff of a well known lender finding themselves in a position in which they cannot refinance their own homes. Such a circumstance is quite ironic in addition to being ridiculous and shameful. The staff may not be the only home owners finding it difficult to locate appropriate remortgages in the current financial climate but their situation is certainly the most bizarre.

The lender is question is Northern Rock. This lender had previously grown to be one of the country’s largest and most successful mortgage lenders before the quality of its loan book was uncovered after the sub-prime mortgage debacle made its way across the pond. Thousands of bad credit mortgages were found to be at risk or in default and the inappropriately named Rock was thrown into turmoil.

It is public knowledge that the Government has controversially nationalized the irresponsible lender in order to save face as well as save millions of Mum and Dad savers and investors from losing substantial sums of money. Such a loss would help to trigger a national recession which is no doubt why the Government was keen to lend billions of pounds to the failed mortgage lender as a rescue package.

However in order to save costs the Rock is trimming plenty of fat from its bloated body and some of those trimmings are in the form of staff. Several thousand jobs are on the chopping block in order to help the nationalized lender reduce its costs by twenty percent. Many of the staff who are in line to lose their jobs hold mortgages with their employer and this is where the sad but ironic situation emerges.

Similar to the majority of home owners in the UK many staff members employed by Northern Rock took out mortgages with short term fixed or discounted interest rates. A large portion of these deals expire this year which means that the staff will be looking to remortgage their homes. This may prove difficult as up to one third of the Rock’s faithful workforce are facing redundancy and the prospect of unemployment, even if temporarily.

These workers are not able to refinance their home loans with the Rock as the lender is pushing many of its customers, including staff that are facing the sack, onto other lenders in a bid to increase the quality of its loan book. The other lender are of course reluctant to approve loans for the unfortunate staff as their long term employment prospects are not good.

The irony of the situation is obvious. The hard working staff of one of the country’s largest mortgage lenders cannot find remortgages for their own homes. While their union may be trying hard to ensure that the redundancies are conducted on a voluntary basis and that the unlucky staff members receive the highest payouts possible they can only achieve so much. This does not include persuading lenders to find remortgages suitable for their homes.

The credit crunch has already claimed many scalps but probably none as unlucky as the staff from Northern Rock who will struggle to finance their homes in the near future.

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