New rules for mortgage approval

Paully232000

http://www.thisismoney.co.uk/money/mortgageshome/article-2589480/Clothes-car-quiz-just-mortgage-Lenders-ask-applicants-questions-lifestyle-prove-pay.html

This has probably been discussed before, but just curious really.

I have just been reading this and from the article at least this doesn't seem any different to what I had to go through last summer to get a mortgage. Maybe I am in the minority.
We were asked about spending above and beyond gas/elec/council tax etc before mortgage was approved. We were asked about pensions (evident on our payslips), childcare costs, We had to do a run-down of expenditure for our broker, car costs, travel costs, mobile phones, insurances etc etc.

This article makes it seem as though it wont be any different in the questions asked, but then talks about how difficult it may be to get mortgages after April.

amnblog

If you read this article with a mortgage broker's eye you would see this is a massive difference.

Last year were you asked how much you spent each month on 'cleaning products' or 'grooming products'?

Paully232000

Thanks for reply, just reading it as a lay person so to speak.

No we weren't asked how much on cleaning products etc but we were asked how much we spent on shopping per week/month which these would come under. Or would i now have to list them separately not just £x/week at tesco/sainsburys.
To be honest without going into my supermarket account i could only hazard a guess at what i spend on individual items.

Wh05apk

On the whole for a broker doing their job properly, there is not a massive change, everything (almost) has to be advised, which is how it should be, we have always taken 3 months bank statements to confirm expenditure (the best we can) the biggest change will be for lenders when underwriting as effectively the responsibility for affordability is moving to them.

amnblog

I am convinced:

This will be a major change across the market in the underwriting of affordability.

Brokers will find each case takes a lot longer.

Applications direct to lenders from borrowers will be a 'horror show'.

shaniannie

Is it a case that brokers will have to verify that a customer spends X on shopping / Y on travel / Z on bills (etc) from statements, and then the underwriters use the figures the brokers have verified OR it will in effect be double checking, where the broker will have to verify it all, and it will then be further verification from the underwriter?

justcat

My main wonder is with questions about council tax payments and costs of commute.

Is there a human person who looks at it and says "They spend £500 a month on petrol but if they move to the house they want, it will only be £50".

Also, what if the council tax is lower where you are moving?

And insurance!! It could be substantially cheaper in a different location.

welshgirl1980

Why dont they ever look at your savings?

dotdash79

All that will happen it that 3 months before applying for a mortgage you par back all the spending so the statements are empty.

amnblog

If you do that you won't fit the lenders expected outgoings, they will smell a rat and decline.

CreditCrunchie

Sorry to butt in on your post OP but does anyone know if it would be a good idea to buy things like insurance, and any big purchases a year before you apply for a mortgage and pay in full (or 6 months before etc), so that when it comes time to apply all your have on your bank statements are rent and utilities instead of lotsof direct debits for different things? I'm not even going to mention my pets as it seems ridiculous they may give you less for that. We have no children and spend almost nothing on 'grooming' or holidays so it all sort of evens out anyway.