Could rental payments prove mortgage affordability in 2018?
Could 2018 see the introduction of rental payments being used as proof of mortgage affordability?
Currently, even though you may have an excellent and long record of paying your rent in full and on time, if you do not have a similar history with a credit card, your credit score could be impacted. This is because your rental history is not currently considered as evidence of ability to afford and pay a mortgage.
When your credit score is affected, this impacts your ability to obtain a mortgage at a preferable rate. This is because when compared to someone who consistently meets their mortgage repayments, your credit record will not look as good. This is true even if the rent you are paying is more than the average mortgage repayment.
If you are thinking this doesn’t make sense, over 100,000 other people agree with you as a petition brought by them earlier this year forced the government to debate the subject in Parliament.
If the Creditworthiness Assessment Bill is passed, it is likely that your rental payment record will be used as evidence of mortgage affordability, and this could be introduced in the New Year.
As a first-time buyer, this will be excellent news for you as it means you could be eligible to apply for lower-rate mortgages, which ultimately save you money.
For further information on mortgage applications and the affordability criteria used by different lenders, speak to a Deal Direct adviser.
To discuss your requirements fully, call 0800 048 8828.
