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Applying for a mortgage - what to expect

The recent changes to mortgage applications have been well documented in the press, but is it so impossible to get the lending figure you need now? We have summarised the new procedure you can expect to go through should you wish to apply for a mortgage on your new home.
 
Mortgage lenders, and rates, will vary slightly depending on their requirements. This is why we would recommend you speak to an independent adviser who will be able to search the entire market, approach a range of lenders on your behalf and find the right fit for your requirements.
 
Advisers get paid in 2 different ways – by charging a fee (this could be a one-off fee for advice, or a fee that pays for advice throughout the term of your mortgage), or by commission, where lenders and insurers may decide to pay the mortgage broker commission for putting your business their way.
 
When looking at how much you can borrow, in the past lenders worked on income multiples. These days they base more of their calculations on affordability. So they look at the amount you have coming in each month and how much you spend. Spending can be broken down by calculating how much it costs to feed your family, childcare, a car loan, your energy bills and even a mobile phone or gym contract.
 
Lenders also need to “Stress Test”. This means they won’t just have to assess your mortgage’s affordability now, they will also need to see if your mortgage repayments are affordable should interest rates rise in the future.
 
Be prepared – this new process can take between 2-3 hours, so have all of your documentation ready.
 
This tightening of lending rules is a result of The Mortgage Market Review - the Financial Conduct Authority's attempt to clean up the home loans market after the easy credit boom of the 2000s that played its part in the financial crisis.
 
But it’s not all doom and gloom, a recent article in The Telegraph suggests that lenders are about to ‘loosen’ their criteria - read all about it here.

 

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