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.
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