The Mortgage Market Review (MMR), a comprehensive review of the mortgage market, began as a Discussion Paper in 2009 and lays down new regulations for the sale of mortgages with the intention of preventing the high-risk lending that existed at the peak of the market.
Since it took effect on 26th April, the MMR provides a framework for mortgage lenders and advisers to ensure only customers who can afford it have access to mortgages.
Much of the focus of MMR is on lenders proving that a mortgage is still affordable for the borrower in the future when interest rates change, not only at the time the mortgage is approved. With affordability checks tightened up, lenders will require more evidence of borrowers’ income and daily expenditure.
Affordability models have been used by lenders for some time, and many of the MMR approaches had already been phased in to the mortgage market before 26th April, however, customers should anticipate having to provide more detail around their monthly income, budgeting and outgoings. Having a more complete idea about household expenditure, including spending on items such as holidays, travel and childcare, is now required when applying for a mortgage.
Lenders must also apply assumptions on expected interest rate changes over the next 5 years to ensure borrowers will still find the mortgage affordable if rates increase, not just for the initial rate on day one.
The changes in the level of detail about a borrower’s outgoings required by lenders emphasises the need for advice. It is no longer about simply finding the lowest rate. Finding the right mortgage deal to suit a customer’s lifestyle and ensuring that they meet the lender’s criteria is vital for a hassle-free process.
Using London & Country Mortgages fee-free mortgage advice service will help borrowers find an appropriate solution that meets their individual needs. By providing advice and assistance with the mortgage process from start to finish, London & Country Mortgages can reduce stress and save time.
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
The reallymoving.com Mortgage Service is provided by London & Country Mortgages Ltd. Beazer House, Lower Bristol Road, Bath, BA2 3BA who are authorised and regulated by the Financial Conduct Authority. Their FCA number is 143002.