New rules for mortgage approval

kingstreet

Many lenders have an automated affordability model, so they already take into account "normal" living expenses. Very few are going to be scrutinising your bank statements and deciding that as you spend £5 a month more than Joe Average on petrol you deserve to borrow less.

If you have;-

childcare
student loans
maintenance
school fees

or if you repay credit commitments prior to taking out a mortgage (but less than three months before) you will find some lenders take the costs into account.

FWIW I've been forensically analysing bank statements for potential issues for years and we already ensure the case will meet the lender's requirements before we submit it.

After 26 April, a good broker will be even more valuable. I think we should increase our £249 charge, as lenders will not be paying us more for totally ensuring our clients meet their criteria before we even submit their application.

After 26 April it should be virtually be impossible to be declined after making a mortgage application via a broker, unless it's due to an issue with the property.

marathonic

I maintain a broken down budget anyway, as every household should.

For people like myself, applying for a mortgage should be just a matter of putting the separate figures from my budget spreadsheet into the application form instead of just using the total.

Of course, this will probably vary by bank and people without household budgets could find it very difficult - and people who curse the bank for giving them such a difficult task as to provide their last 3 months payslips will face a very difficult time indeed.

Budgie85

Will this affect people that have had there mortgage offer and are just waiting for searches and a completion date.

Funny_old_game

Yes. Woolwich as an example will reassess cases under MMR rules if it don't complete by a scertain date. Most lenders are applying this approach way way before D Day.

FelinePrincess

How would this affect someone like me, who pays for all grooming products, shopping, ect in cash?

Thrugelmir

shaniannie wrote: »

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?

As the lender carries all the risk. There'll be no reliance on external input.

deejaybee

I think good brokers will become even more valuable.

For instance in my own case, when we got mortgage with Woolwich few months ago...

We have hardly any petrol/ motoring costs.

I am S/E and actually do loads of mileage in my job, but obviously that is accounted for in my self-assessment pre-tax.

My wife works literally 200 yds from where we live and walks to work and back.

Our car is £20 per year tax, low insurance and very good m.p.g.

We would probably not be believed on this going direct to lender, or there automated models would allocate £XXX to motoring costs.
Our broker had a good relationship with the BM, having put millions of business his way, and sorted it all out for us.

shaniannie

kingstreet wrote: »

If you have;-


or if you repay credit commitments prior to taking out a mortgage (but less than three months before) you will find some lenders take the costs into account.

Hmm. Interesting, yet worrying, for us.


Our house just went on the market this week, and we have 3 viewings on it tomorrow, so when we'll be applying for a mortgage for a new house will depend on when it sells.


We have approx. £2700 on a 0% credit card, but the money to pay it off sitting in a savings account (we told the broker this when he got us a DIP), and it will be paid off on/before completion. I don't particularly want to pay it off beforehand as it's better in our account, whilst it's 0% on the CC.


Will this type of thing be bad?

kingstreet

As posted earlier.

Some lenders will take it into account if it's paid off within three months of application or at completion; others won't.

It's no different to now on this issue.

Thrugelmir

deejaybee wrote: »

Our broker had a good relationship with the BM, having put millions of business his way, and sorted it all out for us.

The financial world is changing going forward. New rules,new game. Adapt or die.