Mortgage application rule changes – how might you be affected?

The introduction of new MMR regulations in April will bring about the largest change to how mortgage applications are assessed in over a decade.

The Council of Mortgage Lenders has advised that mortgage applicants need to be fully aware of how the April 26 changes will affect them. 

The key points to be aware of are:

• A distinction will be made between mortgages that are sold on an 'advised' or 'execution-only' basis. Note that most future mortgages will be sold on an 'advised' basis and all staff selling products will have to be trained to give mortgage advice. 

• The procedure for giving mortgage advice will be highly detailed. You will need to answer more questions to enable an adviser to work out which deal is most appropriate. More questions will need to be asked and so your mortgage interview may take longer.

• When applying for a mortgage you will undergo a 'stress test' to assess your ability to continue to make repayments should your mortgage rate rise and your monthly payments increase. Issues such as retirement and redundancy will also be factored into the assessment.

• Affordability checks will be more stringent. You will be required to provide far more detail as to your expenditure. As well as including normal spending, credit card and loan repayments, you will also need to provide evidence of other spending habits and financial commitments.

• Remortgaging home-owners will also be impacted by the mortgage changes. Applicants will also be required to go through an affordability check.

The rules have been created to protect borrowers and to ensure that they are in a position to afford to take on a mortgage. It is hoped that the new mortgage rules will provide a stable framework for the long term.

If you want to apply for a mortgage and would like advice as to how to proceed, contact Deal Direct and speak to one of our highly trained impartial advisers.

For independent mortgage advice call 0800 048 8828.