Mortgage Market Review

TCPPC

Anyone putting in an application?

In terms of affordability testing whats so different from the past.
Surely the adviser would look at whats your outgoing?

ACG

Affordability has passed to the lender from the broker.

So the lender is ensuring they have dotted the i's and crossed the t's when looking at affordability.

They also appear in some cases to be stress testing at a higher rate than they were previously - so its more likely to fail now than it has in the past.

TCPPC

HI ACG

but in theory just say u took out a fixed 5 year term 3%

After 5 year you have more equity in theproperty then should you be paying similar rate as you are asking for less loan. Lets presume the base rates doesn't go up massively 1 or 2%.

Unless the stress test, tests scenario where rates go up by 5%+

Thrugelmir

Much depends on personal financial circumstances. Onus is fully on lenders to ensure affordability thereby lending in a responsible manner.

If in doubt then lenders will decline.

ACG

That isnt how banks are going to be looking at it.

Stress testing is being done at between 5-7.5% with some lenders. They are looking at worse case scenarios, not what happens if you bring the LTV down and can secure a better rate.

TCPPC

even with government equity loan help shouldnt this be less risky for the lender.

i.e When you know at least 30% to 35% loan are secure?

ACG

If your looking at help to buy, the stress testing is done at the higher end of that scale.

TCPPC

ACG

can you give me some example of what you mean by higher end of the scale.

and how it is calculate?

ACG

Higher end of the scale is lenders stress testing at 6.5-7.5% (rather than say 5.5%).

The easiest to check example i can give is woolwich.
If you apply for say an 85% mortgage they stress test at 5.69%. If you apply for a help to buy mortgage, they stress test at 7.69%.

http://www.woolwichintermediaries.co.uk/WoolwichMortgages/Affordabilitycalculator/IP1242620961812

In the 4th box down you would put the rates above in depending on what LTV.

TCPPC

ACG

i use the link you send i put in the amount after Help to buy amount

was 160k with help to buy 107k

use 7.69%

plus our income etc

Just this bit:
Other regular commitments
Excluding living expenses, clothes, food or utilities

i only include insurance, mobile, fuel, food and utilities (£750).
i think just managed ok

ACG

it means things like hp/credit cards/loans etc. If you dont have any put 0.