Mortgage lenders tighten up after recent Mortgage Market Review (MMR)
By Lisa Burton, Financial Adviser and Specialist Independent Mortgage Adviser, Manning and Company Independent Financial Advisers.
If you want a mortgage after 26th April you’ll need to prepare yourself for the mortgage lender’s scrutiny over your household’s monthly living expenses.
Due to a change in policy brought about by the recent Mortgage Market Review, all lenders will have full and complete responsibility for assessing whether customers can afford the loan. It is hoped this will ensure good lending practices take place and everyone avoids the fall-out of the last mortgage lending crisis.
What does this mean for you, the borrower?
We recommend getting yourself financially fit before even making a mortgage application. Lenders will be looking at 6 months’ worth of finances to assess if you really can afford the mortgage repayments and not just at this moment in time but for future affordability too. If you’re not sure where to start, speak to an independent financial adviser.
For those who would just scrape through now, bear in mind you may not at the end of April. If you already have a mortgage offer but haven’t found a house, get your skates on as you may find you no longer meet the lender’s new criteria at the end of April, when you will need to be re-assessed under the new policy.
Why has this come about?
After the lending crisis peaked in 2007 it was recognised that poor lending practices were putting people and their homes at risk of repossession. A discussion paper was commissioned to review the state of the mortgage market and address poor lending practice, as well as bringing benefits to the consumer. In 2012 a new policy statement proposed a sustainable strategy which the mortgage lenders must comply with by the end of April, although many lenders have decided to introduce the changes ahead of time.
If you are concerned about the Mortgage Market Review policy statement and how it might affect you then don’t hesitate: contact one of our advisers today.