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Fri 30 May 2014
This was the suggestion in an article which I read lately thanks to the recent mortgage market review. The majority of the reforms from the review came into effect in April this year and are designed (say the financial watchdog) to, “ensure continued access to mortgages for the great majority of customers who can afford it, while preventing a return to the poor practices that we saw in the past.”
This, in theory sounds sensible and sustainable, something that the UK property market will surely benefit from. But what are the implications on the ground for those of us looking to obtain a mortgage?
Now, I must make it clear that I am in no way a financial advisor but the ability for purchasers to obtain mortgages does of course impact my day to day work. You are always best to obtain some sound independent financial advice from a qualified financial advisor when considering a property purchase!
However, It would appear from my point of view that where previously lenders have concentrated on the income of individuals and a relevant multiplier of this, they are now much more interested in the affordability of the mortgage product for the individual. In addition lenders will be looking at Stress tests on the loan, for example, should there be movement in interest rates, how would this affect the ability of the borrower to repay the mortgage?
These new assessments are likely to delve deep into your personal finances and how you conduct yourself financially, looking in some detail at your monthly outgoings and financial commitments. This may range from monthly fuel costs for your vehicle, loan and credit card repayments and the cost of your leisure activities to less regular things such as monthly spend on clothes, pet insurance and even, as I heard recently your monthly spend on haircuts!
So to summarise, organisation is going to be key for you here. Ensure that your finances are in order make sure that you have your last few months bank statements and pay slips available as these will likely be subject to scrutiny. Can your current lifestyle and expenditure sustain the mortgage that you are hoping to obtain? Most importantly remember to take some good independent financial advice!
Good luck obtaining your mortgage. Once you have your mortgage agreed, we look forward to hearing from you and helping you to find your new home.