We are now well and truly into the Financial Conduct Authority’s new set of mortgage rules (Mortgage Market Review or MMR)– the last few weeks have been interesting but also somewhat frustrating.
At the heart of MMR is a new affordability check, that will see applicants asked about their income and outgoings including for example childcare costs, gym membership and how often the eat out.
Now my first point is that prior to owning a property, I had no childcare costs, I did belong to a gym which I never attended and ate out about 4 times a week. I have never had so much disposable income since that time, yet I lived permanently in my overdraft.
As soon as I got my first mortgage I cancelled my gym membership and didn’t eat out again for about 2 years. Having finally made the adjustment to homeowner, and once again got some money in the bank I fell pregnant, so basically my “going out” money was transferred to my “childcare” costs.
The FCA said that the changes were designed to "hardwire common sense" into the mortgage application process, which on the surface makes sense. The only problems seem to have come when lenders start interpreting these guidelines for themselves.
Nearly all the lenders we deal with have brought in new systems and tweaked their affordability calculators to take account of the new rules, some of them did this way back last year so the transition has been fairly seamless. Others are taking things to the extreme. Naming no names, but one particular lender seems to want to know how much male clients are spending on male grooming products. I am not sure how to answer this – what happens when Boots are doing a 2 for 1?
For more information about MMR or mortgages in general contact us or call our team on 01628 507477.
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