New lending rules 2014
Advice

New Mortgage Rules - what does this mean for you?

Samantha Robertson-Strong Samantha Robertson-Strong
2 min read
This blog is more than 12 years old

So what’s changed?

On 26 April 2014 new lending rules were introduced by the Financial Conduct Authority (“FCA”) which introduced stricter requirements for both the mortgage lender and the borrower. In short, mortgage lenders are now responsible for assessing whether borrowers can afford the loan in the long term. This can include those who are looking to re-mortgage.

Why has this happened?

The rationale behind this change is to ensure that borrowers are issued with mortgages which they can afford both now and in the future.

Following the housing market crash in 2007 interest rates were rock bottom; now that the economy is steadily improving and property prices increasing, interest rates are expected to increase. The FCA do not want a return to the pre 2007 times where borrowers borrowed too much and struggled with repayments resulting in re-possessions and many people stuck in properties with negative equity.

So what does this mean for me?

There is a requirement for you to take financial advice from either the lender, a mortgage broker or financial advisor in order to find the best deal for you taking into account all your circumstances and whether you can realistically afford the mortgage now and in theanticipated future with higher interest rates - known as “stress-testing”.

There are 27 questions you can expect to be asked ranging from how much do you spend on socialising to have you ever taken out a pay day loan. You will also need to supply detailed proof of earnings for at least 3 months but more likely 6 months. Self-employed people and contract workers will likely receive tougher questions.

These rules are still very new and at this time we have not received any formal statistics on how they have affected borrowing; however experts have warned that thousands of borrowers are likely to be rejected if they do not meet the new requirements.

If you are thinking of buying a house and would like to talk about the legal process involved in purchasing property, please call the conveyancing team for a free no obligation consultation on 0113 320 5000.

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had a great experience with winston solicitor company. The team was professional, friendly, and helpful throughout the whole process. Joe Rawnsley was fantastic. He kept me informed, answered all my questions, and made everything straightforward and stress-free. I’m very happy with the service I received and would highly recommend them to anyone looking for a reliable and trustworthy solicitor.
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We couldn’t recommend Leasa highly enough. She was absolutely brilliant throughout the entire process of buying our first home.The purchase ended up being a fairly long and complicated process, with a number of delays and issues along the way, but Leasa was incredibly patient, responsive and reassuring throughout. She always took the time to explain things clearly, answer our questions and make sure we understood what was happening, which made a huge difference as first-time buyers.We always felt that she genuinely had our best interests at heart and was working hard to keep everything moving, even when things were outside of her control. Her communication was excellent, and we always felt we could get in touch whenever we needed help or clarification.Buying a home can be stressful, but having someone as knowledgeable, helpful and kind as Leasa made the whole experience so much easier.We’re incredibly grateful for everything she did to help us finally get the keys to our new home. We wouldn’t hesitate to recommend Leasa to anyone looking for a conveyancing solicitor, and we would absolutely use her again in the future.Thank you so much, Leasa!
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