Mortgage Borrowers Have Mortgage Affordability Concerns

Wednesday, April 1, 2015
Mortgage Borrowers Still Have Affordability Concerns

Mortgage Borrowers Still Have Affordability Concerns

Research Reveals Concerns About
Mortgage Affordability Checks

New research by Equifax has revealed that many people are worried about the length of time it takes mortgage lenders to assess their ability to repay residential and buy to let mortgage loans, with some fearing missing out on property deals because of the length of time they think such important processes take.

In April 2014 the UK mortgage markets were rocked by the introduction of the Mortgage Market Review (MMR) resulting in lender’s having the onus placed upon them to assess an applicant’s ability to repay mortgage loans.

The research discovered that 59% of people who were either considering or who were already in the process of applying for mortgages had concerns about the time it takes for lenders to satisfy legal obligations assessing the borrower’s ability to repay loans, including property investors and professional landlords who utilise some of the best Buy To Let Mortgage products available.

The obligation placed upon mortgage lenders to assess a borrower’s ability to repay does indeed slow down the application process, but so long as borrowers provide enough supporting evidence showing all relevant expenditure information the lenders will need to assess a mortgage application, then the application process can still be very straight forward.However, 32% of those still considering applying for either a residential or Buy To Let mortgage believe that supplying and obtaining evidence of expenditure would be fairly difficult, whilst 69% were concerned about how more detailed affordability checks would affect the amount that they could borrow. 40% of those surveyed expressed concerns over the length of time the whole mortgage application process could take.

An applicant’s credit history does play a crucial role in a mortgage lender’s affordability assessment, alongside other information gathered as part of the application process.

Applicants should compile any financial documents and expenditure information needed to support the mortgage application, as soon as the application process starts because advance preparation can help mitigate unnecessary delays.

Banks and other lending institutions must take into account all the information provided during the application and examine an applicant’s income and outgoings to ensure they can actually afford the mortgage they are applying for, even if it is a Buy To Let mortgage, now and in the future.

The affordability checks conducted by banks may not be enough to prevent property owners from over stretching themselves financially in the long term, and regular rental income may be the key to the success of the property venture.

Legal 4 Landlords offer landlords and property investors Rent Protection Insurance to ensure the income remains consistent, even if the tenant’s circumstances change.

This was written by Mike Clarke. Posted on at 4:19 pm. Filed under Buy To Let. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.