Due to the financial crisis, caused in part by the property market, the Financial Conduct Market (FCA) has reviewed and implemented a number of changes to ensure this type of thing does not happen again. It’s called the MMR (Mortgage Market review) and it came into place in April, but how does this affect buyers?
The changes, implemented by the city regulator the FCA are designed to ensure people only take out a mortgage they can afford, and to prevent a recurrence of the irresponsible lending practices of the past.
Unfortunately this means that arranging a mortgage through a bank is about to get a lot more complicated & could take more time. Some lenders are already reporting a processing backlog of up to 8 weeks and this will affect those who are in the market for the a new mortgage as well as those looking to re-mortgage.
Firstly those who want a mortgage will be required to be completely transparent about their financial circumstances. This entails demonstrating afford-ability in the present day as well as in the future especially if variables change such as interest rates. Evidence of income, means & outgoings will be scrutinized retrospectively and potentially over a prolonged period.
Lenders will be required to apply stress tests to mortgage applications & will be culpable if a customer they have lent to cannot subsequently afford to replay. Although intermediaries can be used for assessment purposes, the ultimate responsibility will lie with the lender.
It is therefore beneficial for buyers and agents alike to understand the new process and what it entails thoroughly so that realistic expectations can be set for both buyers and sellers & that anybody requiring a mortgage can ensure they have the right information to hand.
If you have a property to sell or let in Watford or Rickmansworth or are looking for a sales or letting agent in Watford or Rickmansworth please contact Watford@hxea.co.uk or Rickmansworth@hxea.co.uk