Income Multiples or Affordability?

Thrugelmir

opinions4u wrote: »

Do affordability models take in to account racehorse ownership?

I'm sure a poster a while back suffered as she kept several horses. The expenditure showed up when her bank statements were reviewed.

opinions4u

Thrugelmir wrote: »

I'm sure a poster a while back suffered as she kept several horses. The expenditure showed up when her bank statements were reviewed.

It is an interesting one as part of the overall debate. It's 8 years since I was closely involved with mortgages and affordability models were at an earlier stage of development then.

To me they make sense, but they need to be part of "prudent lending" rather than an excuse to lend more money than would have been lent under a traditional income multiple method.

From face to face conversations with customers a common response when trying to establish property value has always been "The one round the corner went for £xxx,000 and ours is slightly bigger and slightly better maintained".

Already this thread has brought out the "frugal" who like affordability models allowing them to borrow more. Seems like a bit of an oxymoron there!

Lenders need to ensure they find a balance between asking the right questions to establish affordability and not being excessively nosey about a potential borrower's lifestyle.

Thrugelmir

opinions4u wrote: »

Lenders need to ensure they find a balance between asking the right questions to establish affordability and not being excessively nosey about a potential borrower's lifestyle.

To obtain my first car loan. I had to go to the bank in person and was vetted by the assistant manager. Part of the process was an income and expenditure statement. Considering I still lived at home at the time it was hardly complex! Yet was a basic part of the process.

Over the years since then we seem to have become more liberal. At least to 2008. Now the clock has been turned back. As its been realised the models don't work as people have lost the art of financial discipline and responsibility.