The City regulator has announced more stringent borrowing rules which looks like it may make it even more difficult for individuals to purchase residential property.
The new measures, although have been put back from the summer 2013 to April 2014, will included greater checking of income levels with an overall greater scrutiny of facts around an applications real ability to repay the loan.
Before the financial crisis lenders were handing out mortgages with little real checks and advanced home loans with borrows could not afford to repay. Many home owners began to rely on rising property prices in order to pay back the loan, and in recent years it has only been the fall in interest rate which have allowed people to keep their homes in light of the falling house prices and negative equity situations.
The new rules will see the following points:
- Mortgage applicants must satisfy lenders that they can repay a mortgage, and lenders must check these assurances
- Interest-only mortgage customers must prove they are relying on more than just rising house prices to repay a home loan
- So-called “mortgage prisoners” on old deals will be given some leeway to remortgage, even if they would normally fall foul of the new rules
- No age limit will be set on when a borrower can take out a mortgage
- Those with an annual income of more than £300,000 or with more than £3m in assets will face a less stringent affordability check
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Setfords Solicitors are a national full service law firm, with residential property Solicitors in Eastbourne and across the country.