Special Mortgage Rates, Special Terms and Conditions

First Published: September 28, 2009 ADawnJournal.com

In an ideal world, everyone would have an absolutely equal share of money, opportunity and health, and what they would have would be adequate to live on comfortably. However, the world is not ideal, and through one reason or another some people find themselves having to be satisfied with what they have. In order to equalise things somewhat, there has to be a range of different options which can be applied in situations that require them. What this means in practice is that individuals will be treated differently according to their situation – with the proviso that it must be sustainable. This is why we see different people qualifying for different rates in terms of mortgage lending.

To take a hypothetical situation, an individual – let’s call him Mr. X – may have been living happily for many years in a comfortable job which entitled him to a carefree life, with a credit card bill which he paid in full every month allowing him to avoid interest fees. Suddenly, one day, a company moved into his area doing the same thing that his company was doing, but for a considerable amount less, and business migrated to the newer company. Mr. X found himself earning less commission, and was unable to keep up payments on his credit card, forcing him into a situation where his credit record was less positive than it would have been three years prior. Three years ago he qualified for an excellent mortgage interest rate. Now, he has to accept a higher rate.

This is clearly far from an ideal situation. Through no real fault of his own, Mr. X finds himself in a negative position. Is his bank wrong to approach things this way? From a business point of view, the answer is “no”. His situation created a position whereby he was considered to be more of a credit risk. Banks need to judge risk based on the facts that they have available to them, and quantifiable data. Although Mr X was generally a good payer, he has found himself in the same position as other people who may have been less responsible with credit payments. If the bank were to make an exception for him, though, they would have to do it in other situations and their margin would be reduced.

The price we pay for having a system of credit and borrowing in our economy is that it will sometimes “unfairly” penalise people who have conducted their accounts generally rather well. This system may be imperfect, but as we mentioned at the start of the article, this is not an ideal world. In order to make the best of your situation, particularly if you are one of the many people whose credit record has suffered from circumstances beyond your control, it becomes all the more necessary to look at ways of getting the best deal. This entails shopping around, saving for a deposit and in some cases waiting for your continued efforts to make payments to your credit accounts to be reflected in your credit score. And in the meantime, realize that positive behaviour is, eventually, rewarded.

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