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New mortgage rules: the questions you will be asked

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New rules come into force at midnight tonight aimed at ensuring borrowers are not offered loans they cannot afford. We warn on exactly what to expect



Planning to buy a home or change or move your existing mortgage? If so, brace yourself for a long wait to see a mortgage adviser, three-hour interviews at the bank and forensic analysis of your daily spending habits thanks to new lending rules that come into force tomorrow. Even after jumping through all those hoops, success is not guaranteed – experts have warned thousands of buyers and home owners are likely to be rejected because they do not meet the new requirements.


The City regulator, the Financial Conduct Authority (FCA), has introduced the new rules, known as the Mortgage Market Review, to ensure borrowers are issued with mortgages they can afford both now and in the future. The FCA was concerned that lenders were making it too easy to get a mortgage before the financial crisis. Many households borrowed too much money and found they were unable to keep up their repayments when the financial crisis struck.


So-called “self-cert” loans, where borrowers declared their income but did not have to prove or “certify” it, were common and people routinely exaggerated earnings to borrow more. Interest-only loans also caused problems. Borrowers flocked to these deals because their monthly repayments were lower, but they had no way to repay the capital at the end of the loan. To ensure safer lending in future, mortgage providers are now responsible for assessing whether customers can afford the loan in the long term. This includes buyers and those who are remortgaging and want to increase the size of the loan, vary the time frame or transfer it to a new property.


More: http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10787176/New-mortgage-rules-the-questions-you-will-be-asked.html

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I wonder if this is actually happening and to what extent.


My last four mortgages were all 'self-cert'. None of them ever went into arrears and all were cleared well within the term. The decision to stop offering them was, in my opinion, a 'knee-jerk' reaction by the Powers That Be. Surely it would have been better to simply restrict 'self-certs', perhaps only allowing mortgages of 70% of the property value.


With the disappearance of 'self-certs' I recently had to apply for a 'conventional' mortgage.


I applied for my new mortgage just after these new rules came into force and did not have any interviews with the lender. Nor did I have to give any but very basic details of my income and financial situation. I certainly did not have any 'forensic analysis' or 'hoops' to jump through. I had a short meeting with a mortgage adviser where I provided proof of my identity, address, employment status and earnings. My offer of a mortgage with Santander (Abbey, in fact) arrived yesterday.

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So far, all done free for friends:

Cabot - F&F reduced debt by £7700 (70%)

NatWest - PPI claim - £1,800

NatWest - PPI claim - £6,200

NatWest - PPI claim - £3,000

Co-op Bank - PPI claim - £5,200

Halifax - PPI claim - £2,800

NatWest - debt identified as statute barred - £1,900

NatWest - debt identified as statute barred - £2,700

NatWest - loan identified as unenforceable - £13,400

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I, ve been with the chelsea for 7 years and never missed a payment.2 years ago I opted for an interest only mortgage as I was on a 2 year pay freeze and wanted lower payments as a short term fix. I still have 1 year to run on that deal which is subject to an early repayment fee. Idecided in jan this year to sell my property and downsize to release some equity and put a good deposit down and change to repayment.Thats where the nightmare started.My mortgage is "portable" but when I requested they port it to a new property I was informed that I had to reapply for a mortgage.To cut a very long story short and after numerous 1 hour and 2 hour calls spaced over months I still have no new mortgage and to cap it all I have now lost my buyers who were unable to wait any longer.The chelsea did say to me that in principle they were willing to lend me £53000 , which is half of what I already owe them, subject to a full application and 2 hour phone interview which was due to takeplace this friday 30th may. I made the mistake of telling them the price I sold my house for, so they new how much I had made and it means that even buying a smaller property for £100000 I would be wiped out financially.I have complained to the fso about the length of time this has taken, but thatwont get me my buyers back.So it looks liked I, m trapped in a property I dont want.So beware even if you want to downsize they will make it impossible for you.Ihave now had to put my property back on the market and am now looking for a new lender that hopefully wont take 3 months to process a mortgage.

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