The United Kingdom sees the arrival of stringent mortgage and remortgage application rulings. The new mortgage rules take effect from the 26th of April 2014.
UK MORTGAGE INDUSTRY: Experts expect it to be the biggest radical reorganisation of the mortgage industry for more than 10 years.
There will be probing questions asked about each applicant's financial outgoings.
Many see that as the toughest rule change by mortgage providers for a decade.
The information is likely to include how they spend their regular outgoings. That means items such as credit cards, other loans, travel, childcare, phone bills, hobbies, and clothing.
The aim is to prevent irresponsible lending. Lenders want to verify whether the applicant is able to afford their home loan - or not.
Even so, borrowers should expect longer mortgage application interviews. There will be a big increase in paperwork requests to back-up their spending habits. Extra documentation may also be needed to substantiate income and investments.
Estimates suggest there are more than 11 million mortgages in the United Kingdom. The new mortgage market review (MMR) rulings crackdown could create slight increases in mortgage rates. That could also result in smaller loans for some borrowers.
The April rules' change also brings in a lender 'stress test'. It will anticipate the borrower's repayment capabilities to market changes, redundancy, and retirement.
The mortgage changes are also expected to affect people looking to remortgage their property. Changes to existing loans may be subject to a new assessment. The purpose of this is to check whether future payments will be affordable.
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New Mortgage Rules Start from April 26th in the United Kingdom