Mortgage Regulations Tighter Restrictions by Heather Hilder on December 17, 2019 “Mortgage Regulations” Tighter Restrictions on Mortgages Following the Government’s overhaul of the mortgage market, much tighter restrictions on mortgage applications are in force. This is known as the Mortgage Market Review (or MMR). It is in response to high levels of irresponsible lending in the past. In today’s article, we consider Mortgage Regulations Tighter Restrictions. Tighter Restrictions in FIVE Key Areas Below are five key areas where mortgage applicants, including those people re-mortgaging an existing property, feel the effect of these regulations most acutely: Mortgage Products 1. Mortgage advisors are required to ask questions to determine what mortgage product is suitable. They must take into account the applicant’s personal circumstances in detail. Mortgage interviews could take longer than expected and may even be split into two separate interviews. Mortgage Lending 2. Lenders must assess the future affordability of mortgages, as well as initial payments, by applying an interest rate “stress test” – to ensure that the loan would still pass affordability requirements when interest rates eventually rise. Lifestyle 3. Lenders also have to consider the impact of possible/known future lifestyle changes such retirement or redundancy, when assessing affordability. Tighter Scrutiny 4. There is now greater scrutiny of borrower’s expenditure. For example, the impact of school fees or holidays as well as day-to-day groceries will be taken into account. As a result, borrowers may need to produce more evidence of their spending habits. Mortgage Restrictions 5. Interest-only mortgages are difficult, but not impossible, to obtain. Borrowers must be able to demonstrate a credible repayment strategy to repay the loan at the end of the term. At Callaways, we have always ensured that any offer we submit to our clients is from a buyer who is well-qualified. It is now more important than ever to know in advance that the buyer’s mortgage application will indeed be approved before a purchase is even agreed – so you can sleep easy! Apply the ‘mortgage regulations tighter restrictions’ test from the get-go. Call today to speak to us about your 2020 move on 01273-735237 or write to us at enquiries@callaways.co.uk .
