The financial crisis of 2008 taught us that many people overstretched themselves by taking on mortgages that realistically were unaffordable. To be fair, the majority of lenders were more than prepared to offer loans that were not realistically supported by levels of income.
Nowadays, the key drivers behind mortgage regulation is to provide a better mortgage market for those looking for a mortgage, but also to ensure that the problems of the past are not repeated. The main changes are centred around customers being able to afford the commitment they are entering into and, perhaps more importantly being able to evidence they have sufficient income. Another major change has been that all mortgages must be advised taking away the ability to self-certify income and effectively tell a mortgage broker what they want. There are exceptions to this rule, but it is safe to assume that the majority of us must take advice when taking out a mortgage.
So practicably, what does this all mean for us. In a nutshell, be prepared. When approaching a mortgage provider either directly or through a mortgage broker make sure you have all of your relevant papers ready. Whilst different lenders will want different things the very basics are the same across the board. You will need to have several month’s payslips, so try and keep these all together in the run up to applying. Similarly, with bank statements, check them through as well to make sure that they show a true reflection of your expenditure and that any anomalies can be easily explained.
Whilst things seem a lot stricter than years ago it is for good reason. Responsible lending by the mortgage providers ensures that people can afford the home they buy and reduces the threat of future financial hardships.
Supplied by Citrus Financial whose mission is to help you achieve financial peace of mind.
Contact them today on 01732 834834
or email them advice@citrusfinancial.co.uk
Author: Helen Loder
Co-Director of Sevenoaks Mums