Changes to Mortgage regulations
Recently the Government has changed several criteria affecting individuals when applying for a mortgage, named the MMR (Mortgage Market Review). These changes mean that lenders are applying more stringent criteria on borrowers before they will make a mortgage offer.
Borrowers will now need to pass affordability checks, which involves checking whether or not the individual can meet payments (both now and in the future) if, for example, rates were to rise or if an individual’s personal circumstances were to change.
- Provide evidence of your income to show how much you can afford to borrow.
- If self-employed, provide an SA302 document; this is a summary of everything declared to the Inland Revenue
- Other types of income must be shown i.e. shares and pensions
- Inform the lender if you expect any changes in earnings or outgoings
A lender will also need to confirm your expenditure, as well has how much you earn. This is based on three different categories; essential expenses, basic quality of living costs and repayments/other commitments. Depending on all of these factors a mortgage lender will then calculate affordability of keeping up payments.
An Independent Mortgage Adviser will have access to specific deals that are not available to you as an individual borrower. They will also aim to support you through the process and provide you with a mortgage suitable to your circumstances. All Lenders have different criteria, so if your own lender said ‘NO’, Beacon Wealth Management Ltd may be able to help.
Ask your specialist for advice.
Martin Eaton BSc, CEFA, CeMAP
Mortgages and General Insurance Adviser