chat with mortgage advisor

Carl31

I had a chat with a mortgage advisor this morning, running through an application and our current options

part of the application was to run over income and outgoings. He drew up a final net disposable figure we have each month, which is over 1000, not loads over but over

he mentioned the amount, to which I responded that did he think that was too low? He then said that most applicants have no where near that, in fact some one have about 50 quid, based on current rates.........yet still get mortgages?

So, looks like in some examples, the new affordability tests are pointless, and nothing has been learnt from last time we had this issue

lisyloo

If the calculations already allow for increasing interest rates then why do you think people need loads of money spare?

£1000 seems a lot to me, but of course it depends what was included.
For example was there a budget for unexpected household or car maintenance which can be foreseen to a degree. We're holidays included?

If everything is covered off then I'd almost go as far as saying it's too much and you might want to consider increasing pension contributions or other investments. That's a gut reAction though because I don't know the details of what't included e.g. Emergency fund?, household repairs, car repairs?, holidays?

Carl31

lisyloo wrote: »

If the calculations already allow for increasing interest rates then why do you think people need loads of money spare?

£1000 seems a lot to me, but of course it depends what was included.
For example was there a budget for unexpected household or car maintenance which can be foreseen to a degree. We're holidays included?

If everything is covered off then I'd almost go as far as saying it's too much and you might want to consider increasing pension contributions or other investments. That's a gut reAction though because I don't know the details of what't included e.g. Emergency fund?, household repairs, car repairs?, holidays?

The point I was making that after expenses, people are getting approved mortgages when they have little spare capacity in case things should change. OIf rates should go up a fraction, then they would be in the s h I t, even though we have tighter lending rules, apparently

lisyloo

I was under the impression the new regs already included higher rates so that's already priced in.
Do you have the details of the calcs done in you case in order to confirm/deny?

HAMISH_MCTAVISH

Carl31 wrote: »

If rates should go up a fraction, then they would be in the s h I t,

The new rules require stress testing affordability to 7%.

So that's of no relevance.

shortchanged_2

HAMISH_MCTAVISH wrote: »

The new rules require stress testing affordability to 7%.

So that's of no relevance.

A rate funnily enough which you think is far too stringent Hamish.

lisyloo

So, looks like in some examples, the new affordability tests are pointless

No Carl they are not pointless.
They are making sure people can afford their mortgage if/when rates go up.

Looks like you need to look a bit more carefully at what the calcs are based on.

Carl31

lisyloo wrote: »

No Carl they are not pointless.
They are making sure people can afford their mortgage if/when rates go up.

Looks like you need to look a bit more carefully at what the calcs are based on.

Well, that's surely the point being made? The advisor said that people were being offered mortgages when they have 50 quid left after their outgoings?

How is that affordable? This is despite the stress resting etc...? Even the advisor said he couldn't believe it either

ukcarper

Carl31 wrote: »

Well, that's surely the point being made? The advisor said that people were being offered mortgages when they have 50 quid left after their outgoings?

How is that affordable? This is despite the stress resting etc...? Even the advisor said he couldn't believe it either

i
What outgoings are included.

J_i_m

Carl31 wrote: »

Well, that's surely the point being made? The advisor said that people were being offered mortgages when they have 50 quid left after their outgoings?

How is that affordable? This is despite the stress resting etc...? Even the advisor said he couldn't believe it either

Whilst that is true...

Many people still overlook that currently the market rent rates on properties of comparable value are significantly higher than the monthly mortgage repayment would be...

And I don't know about anyone else, but I struggle to see how a monthly rent which is significantly higher than the monthly mortgage repayment is anymore affordable.

* I know you didn't say it was But I just wanted to point out the irony of refusing mortgages on the grounds of affordability when the result is more likely to push people into even less affordable rents.

Carl31

ukcarper wrote: »

i
What outgoings are included.

I was asked for utilities costs to include phone and Internet, travel/fuel costs, food, credit commitments, any tv/sky subscriptions, then general living costs, which didn't need details. Plus how many kids