New rules, implemented by the Financial Conduct Authority, about the way in which mortgage lending affordability is decided, will come into force on April 26th.
Matt Sanders, Gocompare.com’s mortgage spokesman, said: “This is a great move by the FCA – it protects both borrowers and lenders by ensuring there is more focus on the on-going affordability of mortgage repayments rather than the affordability at application.
“Customers will have to prove their income as well as give evidence of their day to day expenditure, which will give lenders a more detailed picture of their finances and what they can actually afford. We know that expenditure and income can change as personal circumstances change, but mortgage repayments will remain the same.”
Matt added: “With these new rules in place, irresponsible mortgage lending will, hopefully, become a thing of the past and the rules should also help avoid the financial stretch that many faced in the past when they simply borrowed too much, or overestimated their financial commitments, which left them unable to pay their mortgage payments.
“It’s great to see this common sense approach – after all a mortgage is a massive financial commitment, that should not be taken lightly – and ensuring that borrowers will be able to maintain the mortgage repayments in the long term, will benefit all parties.”