If you are considering a new mortgage or any additional borrowing against your home I’d advise to do it now, or at least before 28/04/2014 as that is when new regulations will come into affect.

1. First of all, all secured loan providers will be required to run affordability checks on all applicants. Many banks and building societies have been doing this for a while in preperation anyway. This will mean that applicants will not be able to borrow as much as they traditionally have been able to, under income multiples previously. When you ring up for a loan you will be asked about all your income and outgoings, fixed and fluctuating.

2. All applicants will be pushed towards an advised service for mortgage product and term. Previously the secured lending market worked under non advice and advised. Very few people went down the advised route and opted to select their own mortgage product and mortgage term. All the lenders have been training their staff over the last few months to get them qualified and competent to give mortgage advice for april. What this means to the ordinary person is that the process will take much longer and will more complex. The non advised process over the phone normally lasts about 30 minutes but under the advised process it is more likely to be an hour and a half to 2 hours even before you get the figures.

3. The regulation means there will much more stringent checks. Generally all applicants will be asked for 1 months bank statement, some lenders are asking for 3 months bank statements. This is to show that you have the surplus available to cover the increase in the mortgage, so if you have an overdraft and use it regularly expect to be declined. They will also be checking for any unpaid direct debits and all your outgoings that you declared at quote stage will be checked. So, if you want to increase your mortgage get in credit and stay there, at least until your mortgage is complete.
If you have an Interest only loan or part loan expect some very rigorous questioning, if you have a payment plan (endowment for eg) then you will have to provide evidence of it and that it will be suffcient to cover the loan it’s meant for. The number of things that can be used to repay an interest only loan has been reduced for lots of lenders, downsizing for example is mostly no longer acceptable. Although realistic these sort of things cannot be quantified until it happens and so have been scrapped.
If you are seen to have an appetite for credit you are more likely to be declined. If you are the sort of person with several credit cards with debts on, car finance, personal loans for this and that, lenders don’t like you and will tell you do to do one, espicially if your total debt is more than your gross basic salary.

4. Settled and stable is good. If you’re thinking of moving employment and a new mortgage, make the mortgage app first. If you’re thinking about a new car loan make the mortgage app first.

5. Changes in lending policy. A lot of secured lenders will be scrapping debt consolidation. Given the nature of advice debt consolidation is very complex and most lenders will be choosing not to offer debt consol in the early days of advice, although this is likely to return.

Thats it. If you want to read up on it online further serach for MMR (mortgage market review)

Of course they will all want to ensure they continue to borrow money so, after a few months, things will be back to normal.

went to see our mortgage advisor a couple of weeks ago, because we are going to remortgage soon, but are waiting until some work is finished so we get the best LTV. I asked about the new regs, she asked how much debt we had, we said none (apart from the stinking great mortgage of course), she said don’t worry about it.

Personally, I think the new regs are a good thing, and a return to what lending should be like. Whether you agree or not, many borrowers got in over their heads, aided and abetted by less stringent (read lax) checking.

I’m interested in this, as planning on buying my first house soon – however, I think this is probably a good thing (for me)?

I’m fortunate to be in a reasonably good position (i think), likely to be looking at about 70-60% LTV, dual income, no dependants, young professional, no debts etc… my thinking is if I can’t get a mortgage, who can? Also why would I want a mortgage I couldn’t afford (naive assumption the checks aren’t flawed here perhaps..) If new regs make it harder for folk to get them, less buyers on the market = less competition for me.

Or have I got this all wrong and I’m screwed?

qualified and competent to give mortgage advice for april

That made me laugh; from the evidence I’ve seen most bank advisers are qualified, but not competent 😉

Jekkyl; How’ve you found applications over the last few weeks – I’m finding most lenders have implemented MMR regulations and operating under the new systems already. Most cases are going through ok…just the credit impaired that are proving to be a challenge these days.

The main issue is for financial outliers – older people looking for a mortgage, younger people with less history of employment. My wife works in credit risk and it’s definitely not something that’s going to go away.

Mark Carney has warned that we’re back to excessive borrowing which puts us at risk of another crash. Clearly the London housing market is a bubble…

So limiting the amount people can borrow is surely a sensible thing for long term wealth and stability?

Quite shocking how after only five years from the biggest economic crisis in recent decades and we’re back to the same behaviour of greed amongst sellers and panic amongst buyers – human beings really are that short-termist and over-optimistic it seems.

went to see our mortgage advisor a couple of weeks ago, because we are going to remortgage soon

Don’t wait too long. The rates are creeping up. We are just remortgaging. Already the best deals I found over Christmas have gone. The deal I settled on has just gone up but the bank said they will honour that rate as we started the process (booked an appointment) before it changed. They also gave us an increased valuation just based on how long it’d been since the last valuation. It was just enough to move us into the next bracket. A full valuation would have been over £300!

We’ve just gone onto a new mortgage deal and the process was quite a surprise – as you wrote above it took quite a long time, at least 45 minutes.

I almost feel like I’m being discriminated against.

qualified and competent to give mortgage advice for april

Another miss-selling scandal in the making 🙂

Wondering how this’ll affect the specialist/non standard market -self employed/ltd company contractors ie us. 🙂

On a broader note, moves homeownership even further out of reach for those on the oh-so-popular, future-of-employment zero hour contracts. Definitely a country of two halves these days.

It’s a step in the right direction of reverting a now deeply ingrained culture of entitlement to a perceived minimum standard of living that is unrealistic compared to actual household incomes.
Debt fills the gap of course, which has been willingly encouraged by lenders over the last decade or so.
On a personal level it depresses me greatly that I live in an age where one of the most basic needs of life is rapidly moving beyond the reach of large sections of society.

We have a lot of pain to go through yet if we’re serious about living within our means. Doubtful in my lifetime.

Hmm.

My fixed is ending next feb – currently at 3.35%, rising to 5.5%. What to do…. A new fixed for longer?

It’s a step in the right direction of reverting a now deeply ingrained culture of entitlement to a perceived minimum standard of living that is unrealistic compared to actual household incomes.

By entitlement do you mean expecting to live in a fair society that caters for all rather than the very rich?

It’s only unrealistic / unobtainable as recent governments have decided to make it so by encouraging a debt fuelled hosing bubble….

Just gone through this. Multiple appointments and hours on the phone to end up being advised to choose the mortgage we picked from the lender’s website weeks earlier…

You moving Andrew?

These regulations can only be a good thing surely, the country has been on a 15 year debt binge that was fully encouraged by government as well as banks. It was never sustainable and things need to adjust.

An economy based largely on ever increasing house prices is not healthy. We seem to have got to the point where the younger generations cannot afford to do much past pay the rent/mortgage so something needs to change and offering them longer terms on their borrowing is not the answer.

I (remortgaged) fixed for three years about 9 months ago with some further borrowing.. It was supposed to be tough then but it was done and dusted very quickly.
However we have no loans still own just about half our house and use one credit card to buy everything and pay it off on full each month. I think those things will be the key yo making it still proceed quickly…

They’ll start analysing in greater detail weekly/monthly/annual outgoings, it may knock the lending/borrowing market for a few months but come Summer everyone will be used to it.
I’m not sure it will limit the maximum mortgage offers people get but the process will definitely become drawn out in comparison.

Luckily I have an offer from February which I just need to amend when we actually find somewhere we like enough!

Well thanks for this cheerful post. 😐

If you don’t have the income to cover the mortgage things will go really bad for you really soon.
If the Tories get another term (god I hope not) the interest rate will raise. Then a lot will struggle.
So all in all I see no problem with this.

If it’s done right, it’s a good idea. If it’s done badly, it’s a bad idea. Unless the industry’s changed a lot in the 5 years since I left, it’ll be done badly.

We did the whole affordability assessment last year for our first mortgage – full breakdowns of monthly spending on about 20 categories – birthdays/travel/insurance/hobbies etc. May have take a low average on the latter…

Anyway, they lent us a lot more than we expected (95% LTV), so really don’t think it’s as negative as all that.

Since the debt fueled crash of 2008 the human race has added another $30 trillion of debt to the debt pile.Plus, the total money base created by QE is greater than the total money base of the USA pre 2008!What could possibly go wrong?Happy days.

Just say NO.

Believe they are to put the above procedures in before the Bank of England
puts up the Interest rates.