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Will the new mortgage rules affect your property purchase?

Snakes and ladders board with house

Lenders have introduced rules that tighten the criteria for getting a mortgage. Are you struggling to borrow money or are you worried about your next move up the property ladder?

When I took out a mortgage three years ago to buy my first home, the process was quite smooth. I found my flat, proved my income to my lender and borrowed the amount I wanted with little fuss.

But things are a lot tougher for today’s first-time buyers. New rules require a more stringent assessment of your income and outgoings before you can get a mortgage.

Not only will you have to show essentials, such as bills, food and council tax, but lenders may choose to ask you about living expenses, including nights out, clothing and even haircuts.

The aim is to prevent a return to the bad old days of reckless lending, when many people were given loans they couldn’t afford.

Nights out, clothing and haircuts affect mortgage approvals

I’m glad I missed this the first time around but, as an existing borrower, I’m not immune to the changes. Those looking to remortgage or move with a portable mortgage will also be affected. And, with an eye on moving next year, I’m worried.

Lenders don’t have to check affordability where there’s extra borrowing, the monthly payment is the same and the borrower has missed no payments for the past 12 months.

My lender said it wouldn’t apply an affordability test if I was remortgaging my current home, but would if I was moving but not borrowing any money. I called other lenders and each has different policies. Some won’t do the assessment for remortgaging or moving, others would for both.

I suspect that, until the rules bed in, we’ll see different interpretations of them. My fear, like many others in a similar position, is that they may hold me back as I try to take my next step on the property ladder.

Have you had difficulty obtaining a mortgage – or are you in the process of remortgaging? I’m keen to hear about your experiences of the mortgage market.


It is a good thing to have a return to, hopefully, responsible lending. Borrowing what you can genuinely afford helps protect people from problems, particularly when interest rates rise. It will also help curb house price increases in many areas. Many of us have stretched ourselves to the limit on the assumption houses are the best investment we can make, so keeping a lid on our limit is for the good. My younger son recently took out a trouble-free mortgage on a first house based on his and his partner’s salaries, but they were able to raise a 10% deposit which helped with the interest rate.
I wonder how many loans are reduced because of the lender placing a lower valuation on the property than the hoped-for price. This is the way of curbing prices by dealing with over-priced properties. A lesson hopefully learned from the 2008 problems.
Buying is still better than renting, unless your location is unsettled and can change fairly often.

The warning flags are already being put up for progressive rises in interest rates for borrowing. Even though the rise in percentage points might be small, this is deceptive because the actual monthly repayments on a mortgage could soon be double the present levels and this has to be factored into household budgets. Lenders obviously need to be careful to ensure that borrowers do not over-extend themselves and get into difficulties when rates go up. As well as looking at incomes, lenders are paying increasing attention to job security and are making a judgment on family expectations in case one earner is taken out of the equation. It’s going to be tough but prudent.

It never ceases to amaze me how London and the south east seems to be able to keep absorbing households by dividing the properties into smaller units and intensifying the development of every square inch. People in that region are having to pay far too much for less and less but I don’t see much prospect of moderation in house prices so long as this process continues. Perhaps there will be some movement over time as people who really do not have to live in London, and those who can no longer afford to do so, decide to relocate. There are many lower priced areas throughout the country but the age-old problem is the lack of suitable employment. I believe there is actually a small net internal migration out of London but the population is rising as a result of international migration and the birth rate [which is a consequence of the relatively young age of London’s population compared with other areas of the country]. The post-WW2 baby boomers have now largely reached retirement age and perhaps there will be a general exodus but there seem to be few signs of it at the moment for a whole range of reasons [including the desire to hang on as long as possible in what remains a more favourable location despite all the complaints!].

Rob H says:
29 May 2014

Interesting though all the chat is about mortgages and the changes thereto – WHEN O WHEN will the law be improved with regard to selling and buying property.

Having jumped through hoops to get a mortgage you then risk losing your dreamed of home at the very last minute. All that money you’ve spent on surveys, solicitors and perhaps removal company deposits — All that time you’ve spent packing, organising the utilities, informing every Tom, Dick & Harry of your new address — Only to have the rug pulled from beneath you when the seller of your dream home changes his mind or the your buyer fails for any one of a million reasons.

Someone tells me the Scottish Law is better. Is it? Can we learn something to at least help show that buying and selling a house is a serious, not to be trifled with, decision. At least let us not be out of pocket.

Could this be the good subject for a Which? Campaign.

T Gordon says:
2 June 2014

I’ve been hindered by the MMR changes to the point its added weeks onto trying to complete. Utter farce. And I would totally avoid dealing with any high street lender – use a proper mortgage advisor. Instead of an operative trying to fit their employer’s standard product to you, I found my mortgage advisor has scoured the market to find the best product to fit my wants and needs.

As for the affordability testing, total tripe. It isn’t going to stop irresponsible borrowing, its actually going to stall the housing market. I could list a dozen instances from the past two months where the service from the high street lender I was using was below par. And I have had to fight and complain endlesly these last 5 weeks to re-secure the funding originally promised me before Easter.

At no point was I ever asked about my savings, so yet again, being a saver in the UK means nothing. Surely an affordability test should factor that in? Proof to me that the FCA dreamed this all up on a flipchart on a training day without any meaningful impact assessment carried out. And with no actual thought on how the implementation of MMR would be properly governed.

Overall, I feel so sad for the thousands who’ve had dreams dashed to pieces because of these half-baked changes. Utter nonsense.

My son has just succeeded in getting his first mortgage from RBS: yes, there were delays, but none of them, I think, due to the new rules: more down to a catalogue of crass incompetence on the part of the bank: he only went there as he’d had an account with them since childhood days: so much for customer loyalty!
1. No 4pm appointments available with mortgage adviser for 2 weeks (my son could not attend during his working hours). This is somewhat contrary to a leaflet they have on their counter about “appointments to suit you”!
2. First appointment cancelled one day before “Oh, he’s on holiday this week” – surely they must have known that when the appointment was booked – and surely there’s more than one mortgage adviser in the whole of RBS Edinburgh?
3. Next appointment 2 further weeks on: turned up – “Oh, he can’t see you today – he’s in a meeting”. After much computer-gazing, appt found for the next day! Long interview: “you’ll get your offer within a few days”.
4. 2 weeks on – no offer received. THEN they decide they can’t accept one of son’s pay records as it wrongly shows him as “Miss” (OK, employer’s fault, but his name is unequivocally male and everything else matched up – first and second names, NI no, payroll no, etc).
5. Payslip sorted over next week. Solicitor waiting for copy of the offer which had not been sent to him by RBS.
6. RBS faxes offer details to wrong branch of solicitors, despite correct address and fax no being in the offer.
Son finally gets keys 8 weeks from when his offer was first accepted: should have been done in half the time! Oh yes, should have gone to a broker!