It’s the final countdown…to MMR

The final countdown has begun. From Saturday, borrowers will be faced with a whole new world when looking to apply for a mortgage. The Mortgage Market Review comes into effect from Saturday 26th April and borrowers need to ensure they are informed by keeping these three things in mind:

1.         Affordability is the key

After Saturday, lenders will no longer be using income multiples to determine how much you will be able to borrow. Instead, the new rules stipulate that they must look more closely at your level of affordability instead. Put simply, lenders will be doing a more thorough investigation of your earnings and outgoings, looking in a much greater level of detail into how you spend your money on a monthly basis. Therefore take into account that all of your monthly expenditures may affect your application, even one off luxury purchases such as holidays or eating out at the weekend.

2.         Interest only borrowers may be hit hardest

Lender criteria will vary considerably on interest only mortgages. However, under the new rules, all interest only borrowers will need to demonstrate alternative methods of repayment of their loan at the end of the term in order to be approved. This may involve demonstrating additional income from a buy to let property, investment or pension plan.

3.         Get advice early on to avoid missing out

Getting into your dream property will require planning. Timescales have been lengthened as a result of MMR and you need to be speaking with a qualified adviser early on in the process. Our team are already fully qualified to advise clients and do not need any further training, therefore the impact on those borrowers securing a mortgage with professional help will be minimal. However, the same cannot be said for those choosing to apply direct with a lender, as these borrowers are likely to find themselves the victims of delays after the new regulation is introduced over the weekend.