Introduction of a new set of rules governing mortgage lending
11 April, 2014
This coming month sees the introduction of a new set of rules governing mortgage lending. The Mortgage Market Review, created by the Financial Conduct Authority, is designed to protect consumers and prevent excessive or risky lending by mortgage providers.
So what does this mean for borrowers? Simply put, the number of affordability checks carried out when you apply for a loan will rise as lenders will be required to delve deeper into your financial situations before deciding whether to offer a mortgage.
All monthly payments and household expenditure will be considered during the application process and will need validation.
So the cost of travelling to work, childcare, other household bills including energy costs, as well as details of any loans and credit cards that will continue after the mortgage is taken out will all be taken into account. And the new rules may mean some borrowers find they can borrow less than they might have expected in the past.