22014Sep

Are You Worried about The Mortgage Affordability Rules?

The new affordability rules introduced this year have made getting a mortgage more uncertain for both first time buyers and existing homeowners planning to move house. In order to guide you through the extended application process and to find out how much can be borrowed, it is best to take impartial advice from a whole of market mortgage adviser firm.

Following the comprehensive Mortgage Market Review, in April 2014 the Financial Conduct Authority introduced new rules making it potentially much harder to get a mortgageFollowing the comprehensive Mortgage Market Review, last April the Financial Conduct Authority introduced new rules making it potentially much harder to get a mortgage. The application process has become more onerous with Mortgage Lenders being obliged to verify that applicants will be able to afford the mortgage repayments even if mortgage interest rates increase.

Firstly the regulations have impacted adversely on those people who need to borrow at a high loan to income multiple. Secondly, prospective homeowners who spend a large share of their earnings on non -mortgage related activities will have been severely affected because they will not be able to show that they have sufficient excess income to finance the required mortgage. Thirdly, whilst proving a challenge for those who spend most of their income on basics, it affects severely also applicants who have financial commitments on big ticket items like school fees and care home contributions for their parents.

As a consequence of the changes, potential first time buyers will be even more concerned about how they will ever get onto the housing ladder even if the rate of house price increase is slowed. There are also many people who will not be able to re-mortgage or move home because they will no longer be eligible for a mortgage of the size which they currently have.

If you are looking for a mortgage, there are a number of things which can be done to improve the chances of securing a loan.

  1. Build up your credit rating by taking out a credit card or overdraft and making the repayments at the scheduled time
  2. Repay any non- mortgage related debt so that your expenditures do not include any interest or capital payments.
  3. Apply and check that you are on the electoral roll
  4. Make your deposit as large as possible to enable a mortgage to be secured at the lowest rate

In order to navigate through the new rules and establish with confidence how much you can borrow, a whole of market adviser like Bower Mortgages will help applicants to understand the procedures and have access to the best mortgage deals which are available. By contacting Bower, applicants can overcome any worries which they might have about the new affordability rules.

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