New mortgage rules making it harder to get a mortgage?
New mortgage rules have come into force – will it make it harder for you to get a mortgage?
At Willow Private Finance we think the answer is NO!
When starting over from divorce, buying a new home is often part of that process, but will these new rules make it harder?
As of the 26th April 2014 new rules regarding affording your mortgage have come into effect. This means that we will have to prove to lenders that you can afford your mortgage now and if interest rates were to increase. At Willow we have always taken into account your affordability in the future to ensure that you are able to remain in your home.
The new rules are designed to stop home owners from over stretching their incomes. The new rules will ensure that anyone buying a new home can not only afford the initial cost but also the cost if interest rates were to increase. During an application we will continue to use each lenders affordability criteria to ensure that you can maintain your payments. The criteria will include the cost of potential higher interest rates.
The Money Advice Service published their survey findings on 3rd April 2014 suggesting that three in four first time buyers admitted to over stretching their budget, because they had “fallen in love” with their dream home. They also found that more than half said that the total bill for buying their home was almost £1,300 more than originally budgeted for. Again more than half of the first time buyers asked said that the day to day maintenance and bills turned out to be more than expected.
At Willow when we first talk to you about buying your new home, we discuss in full the cost of buying your new home and the day to day running and complete a comprehensive budget planner to hopefully eliminate any surprises, in either area.
Changes in the information required by lenders:
There has been some press reports that lenders will now require more evidence for incomes etc. However, we will always ask that you provide 3 months payslips if employed or 3 years signed trading accounts and SA302’s; 3 months full personal bank statements; and of course a fully completed budget planner. All of these requirements have previously been as standard and will continue to be so (unless the lender requires any further evidence).
During our meetings we will always discuss the “what ifs” with you, for example what if you lose your job, were to be unwell, have children or get divorced. This will help us to ensure that you can afford your mortgage not only now but also in the future.
If you are looking to remortgage, you will need to meet the lenders affordability criteria. However, this has always been the case and you could still potentially save money by moving lenders.
If you would like to find out about buying a new home and the new affordability criteria’s or a review of your circumstances to ensure you have a mortgage suitable for your individual needs and circumstances please contact me on 01903 890529 or visit my website www.sheilawillow.com to arrange your no obligation review.
As I am Independent you can choose how I am paid for the mortgage advice I provide: I can accept commission from the lender or I can charge you a fee typically 1% of the loan amount.