Stupid new MMR rules !!!

njc123

How stupid is this we currently have a mortgage with first direct and looking to port the mortgage to a new property we currently owe £133000 just sold ours for £196500 and have had an offer accepted on a new property at £189995 so no new borrowing needed and still under 75% Ltv.

However when I spoke to them earlier at great length they came back and said no sorry we can now only lend you £109000 !!!

My husband earns £26000 and I earn £11280 so that is only about 2.7ish x salary.

Does this sound right?

ACG

Do you have any credit commitments? (Loans, HP, credit cards?)
Do you have any children?
How long is the mortgage term?

njc123

Hi no loans hp or credit cards 2 children and mortgage term 22 years thanks acg

ACG

It seems a little bit on the mean side.

Can you extend the term? Im not sure it will get you to £133k but you never know.

njc123

Apperantly they did stretch the term right to retirement age but the underwriters still said no,thanks for your reply.

Thrugelmir

njc123 wrote: »

However when I spoke to them earlier at great length they came back and said no sorry we can now only lend you £109000 !!!

My husband earns £26000 and I earn £11280 so that is only about 2.7ish x salary.

Does this sound right?

2.92 times to be precise.

Far too simplistic a view. Debts and/or children need to be taken into account. long with the fact that lenders will be assessing affordability if interest rates were 7%. As yes, one day they'll be back at that level.

kiddakidda

What are your child care costs?

regprentice

The MMR takes into account more budget factors than simply salary multiples.

There was an interesting point made by a broker a few weeks ago (apologies cant remember who) - a single person earning 15k a year with minimal outgoings could be approved for a 50k mortgage. The same person with a non working partner (child care) and a child would only be approved for £300. More than a 99% cut simply because there are three mouths in the household

kingstreet

That was me and a Leeds case I was working on at the time.

Absolutely true.

amnblog

The regulator gave the Lenders scope within the MMR rules to handle these kind of anomolies. 3.3.57

Lenders are generally choosing to ignore these opportunities.

MandaMooToo

We were told we could borrow £210,000 in February but when we went for the mortgage in principle in June it had dropped to £143,000 so I feel your pain! For us, nothing had changed other than we had actually paid off our credit card (so logic would say we should have been able to borrow more if needed).

I understand taking my children into consideration, and the interest rate rises but my dogs? My Sky subscription and a professional subscription I have? All 3 of these would be gone if it was a case of paying them or losing my home! (These were just 3 of the things I can remember being asked about... there were loads including haircuts, beauty products, clothes, dining out etc etc - all of which would be stopped if needed).

I have 2 separate couples (friends) who have had to withdraw their 1 and 2 bed homes from sale because they no longer are able to get a mortgage for the modest 3 bed they are needing. They've both now gone onto the council property list (with about as much hope of getting one and getting the mortgage) It just doesn't make sense to mortgage people out of the market when the price for a 1 bedroom ends up being more than a 'normal' borrower can be loaned.

As a broker - do you think everything they take into consideration is called for?