Buying a home is already one of life’s most stressful experiences – but has it just been made even more of a pain with the introduction of new mortgage application rules?
Siobhan Mail, Director at leading Wales-based financial planning specialists Seer Green, says three-hour interviews, forensic analysis of your daily spending habits, cross-referencing of credit checks are all headlines that have done little for the well-being of those looking to take the first steps on owning their own home.
“The new Mortgage Market Review regulations that came into force this week have certainly attracted some stories enough the scare the faint-hearted from even contemplating applying for a home loan. But, panic not,” she said.
“Yes, new homebuyers and re-mortgagors will certainly face much tougher checks before being granted a loan under these new rules introduced by the City regulator, the Financial Conduct Authority.
“But tougher compared to what? Compared to the kind of irresponsible mortgage lending that characterised the market before the housing bubble burst in 2008 – when practices and products like 125 per cent mortgages and self-certification ‘liar loans’ were commonplace – then, yes, the new rules will seem more like an inquisition than those crazy tick-boxing days that ended up almost bringing down the economy.
“However, many of these new rules, introduced to stamp out irresponsible lending, have been already been adopted by many in the industry, including ourselves, for at least the last 12 months.
“While this all means much more of a forensic approach to assessing a mortgage applicant’s affordability, and it might well take longer to have a home loan agreed in the future, there will be cases where applicants will actually be able to borrow more under the new rules than in the past.”
Siobhan added: “There has been a lot of scaremongering in the last seven days about applicants having to provide lists of their monthly spending habits. In reality, lenders will just want to explore someone’s exact affordability to ensure their potential property purchase will continue to be affordable – not just now, but in the future.”