Mortgage application changes 14-04-14
Discussion
GTO Scott said:
Just run through the Nationwide calculator, with household income of £32,000 and with £4k of unsecured debts the max I could expect would be £89,500, or without the debts £109,300. How does a £4k credit card make £20,000 of difference?
For every £1 you have you can borrow up to £5. So for every £1 of debt you don't have, you can borrow £5 too. £4000 x 5 = £20,000Pretty sure that is how it works.
vescaegg said:
For every £1 you have you can borrow up to £5. So for every £1 of debt you don't have, you can borrow £5 too. £4000 x 5 = £20,000
Pretty sure that is how it works.
No, doesn't work like that. Pretty sure that is how it works.
It's calculated on the monthly payment and the impact on the disposeable income.
I am quite worried about this and don't know how this will all pan out.
I am a FTB and have been saving for a hefty deposit for about 5 years to buy a property worth around 185k. Unfortunately the new government Help to Buy scheme has whacked the asking prices of these properties to around £210k in the last 6 months. All hope of getting a small 2 bed house in a reasonable low crime rate area in Basildon, have pretty much gone completely.
I hope to see a Financial adviser in the next couple of weeks, but can't help feeling that the £120k mortgage that I thought I could get last year on the web calculators, will now be substantially reduced.
I am on **k, with a **k deposit and will have around 10k in reserve. I do have overtime that I can put in each month as well. I have no bad credit, in fact I have no credit history so I am now trying to build this up. I have no loans, debts or anything, been in my job 11 years, hardly any travel expenses (as I work locally), no dependencies and no sign of redundancy. I am 39 now but can't help thinking in addition to affordability checks, I am now also going to run into issues with getting a mortgage past the age of 65 now this new regulation has come in. Nationwide only seem to want to do 120k on a 31 year term.
I don't know with the rising house prices and the affordability and additional checks whether I am truly stuffed. Seems like various things are conspiring against me at the moment, even though I have saved and done everything that I thought was right
I am a FTB and have been saving for a hefty deposit for about 5 years to buy a property worth around 185k. Unfortunately the new government Help to Buy scheme has whacked the asking prices of these properties to around £210k in the last 6 months. All hope of getting a small 2 bed house in a reasonable low crime rate area in Basildon, have pretty much gone completely.
I hope to see a Financial adviser in the next couple of weeks, but can't help feeling that the £120k mortgage that I thought I could get last year on the web calculators, will now be substantially reduced.
I am on **k, with a **k deposit and will have around 10k in reserve. I do have overtime that I can put in each month as well. I have no bad credit, in fact I have no credit history so I am now trying to build this up. I have no loans, debts or anything, been in my job 11 years, hardly any travel expenses (as I work locally), no dependencies and no sign of redundancy. I am 39 now but can't help thinking in addition to affordability checks, I am now also going to run into issues with getting a mortgage past the age of 65 now this new regulation has come in. Nationwide only seem to want to do 120k on a 31 year term.
I don't know with the rising house prices and the affordability and additional checks whether I am truly stuffed. Seems like various things are conspiring against me at the moment, even though I have saved and done everything that I thought was right
Edited by anonymous-user on Sunday 29th March 21:58
2nd time lucky with HSBC for me - original application to buy house, they wouldn't lend me enough, remortgaged with them last month (2 years on) and I got it.
Both occasions had to go through everything, including food, sky, pensions, utility bills,3 years p60's and 12 months payslips. They are very careful.
Now on a 1.5% over base tracker and saving quite a bit per month.
Both occasions had to go through everything, including food, sky, pensions, utility bills,3 years p60's and 12 months payslips. They are very careful.
Now on a 1.5% over base tracker and saving quite a bit per month.
anonymous said:
[redacted]
I don't really see MMR as your problem. A few months ago your MAX lend would have been simply £26k x 5 = £130k which, plus your deposit, isn't enough if the properties you are after are now £210k....MMR hasn't changed anything for you, the market has just moved.Sarnie said:
I don't really see MMR as your problem. A few months ago your MAX lend would have been simply £26k x 5 = £130k which, plus your deposit, isn't enough if the properties you are after are now £210k....MMR hasn't changed anything for you, the market has just moved.
Was just wondering if MMR is going to have an impact, i.e if they don't lend as much or if it more strict if it goes past 65 yrs.It is most frustrating the prices have moved by 20K+ in the last 6-9 months though. Kind of relegates me now to looking in areas with treble the rates of crime.
anonymous said:
[redacted]
MMR isn't designed to simply reduce lending capacity across the board. It's designed to just be more accurate in the approach to lending.For example, up until a year or so ago, it was never asked if clients had nursery/childcare costs, it wasn't deemed important. If asked, some people would say zero if they have a Grandparent who will look after their child, which would be fine. However, I had one client who disclosed that he was paying £1,400 a month in childcare. As a lender, which one would you be more comfortable lending to?
MMR is just designed to more accurately assess peoples lending capacity beyond a simple income x income multiplier.
Edited by Sarnie on Monday 21st April 23:44
Sarnie said:
MMR isn't designed to simply reduce lending capacity across the board. It's designed to just be more accurate in the approach to lending.
For example, up until a year or so ago, it was never asked if clients had nursery/childcare costs, it wasn't deemed important. If asked, some people would say zero if they have a Grandparent who will look after their child, which would be fine. However, I had one client who disclosed that he was paying £1,400 a month in childcare. As a lender, which one would you be more comfortable lending to?
MMR is just designed to more accurately assess peoples lending capacity beyond a simple income x income multiplier.
Thanks For example, up until a year or so ago, it was never asked if clients had nursery/childcare costs, it wasn't deemed important. If asked, some people would say zero if they have a Grandparent who will look after their child, which would be fine. However, I had one client who disclosed that he was paying £1,400 a month in childcare. As a lender, which one would you be more comfortable lending to?
MMR is just designed to more accurately assess peoples lending capacity beyond a simple income x income multiplier.
Edited by anonymous-user on Monday 21st April 23:44
. It does make sense that costs such as that should be included now. anonymous said:
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When you think about it, it's actually crazy that it's taken this long to get to this point!Only last week did I provide 3 months statements to a lender. They picked up a standing order for £50 a month and asked what it was for; turns out it was repaying money owed back to an ex, they assessed it in the normal way that a standard loan would be and reduced the borrowing accordingly.
This is what MMR is about; accurately assessing affordability. It isn't in the slighest about reducing borrowing, just reducing borrowing of those that actually can't afford it.
Won’t it affect the banks’ profits too? As an example, last month I could borrow £180k for 40 years, this month I can borrow £160k for 35 years. I then make over payments with the spare money reducing the term by a significant number of years therefore paying less interest to the back.
Where will that shortfall come from? Or with less people defaulting it will make up the difference?
Where will that shortfall come from? Or with less people defaulting it will make up the difference?
I have no idea how this is going to pan out. For example what happens when city worker on 30k P/A goes to get a Mortgage and gets knocked back as they have a £250 per month train fare?
I am worried that things like my £50 per month petrol travelling to and from work, or my pension contribution will be used to knock what I can afford down.
It will be horrendous for people with childcare bills, or a personal loan, or other commitments, if something as small as £50 a month can make a difference to what you can borrow.
I also expect more people to be squirrelling money away at home in the months before they apply to keep withdrawals and payments off their statements as much as possible.
It all seems a bit overcautious now compared to how lax it was before.
I am worried that things like my £50 per month petrol travelling to and from work, or my pension contribution will be used to knock what I can afford down.
It will be horrendous for people with childcare bills, or a personal loan, or other commitments, if something as small as £50 a month can make a difference to what you can borrow.
I also expect more people to be squirrelling money away at home in the months before they apply to keep withdrawals and payments off their statements as much as possible.
It all seems a bit overcautious now compared to how lax it was before.
anonymous said:
[redacted]
But we all know how that panned out don't we!From the seminar's I've been to, most lenders right now are interpreting MMR differently meaning that lending decisions are going to vary wildly from lender to lender. Most of them have also said that they expect to see a relaxing of the regulations over the next few months as lender realise that some of the criteria they have deployed is ridiculous.
With regards to the other parts of your post; lenders expect people to have outgoings, they understand that there are costs of living. It's the undisclosed commitments and larger than normal costs than lenders are trying to weed out.
Pre-2007 was like the wild west and currently it's like a Nazi state. Hopefully in 12 months time things will have settled down to a happy medium of the two.
Sarnie said:
But we all know how that panned out don't we!
From the seminar's I've been to, most lenders right now are interpreting MMR differently meaning that lending decisions are going to vary wildly from lender to lender. Most of them have also said that they expect to see a relaxing of the regulations over the next few months as lender realise that some of the criteria they have deployed is ridiculous.
With regards to the other parts of your post; lenders expect people to have outgoings, they understand that there are costs of living. It's the undisclosed commitments and larger than normal costs than lenders are trying to weed out.
Pre-2007 was like the wild west and currently it's like a Nazi state. Hopefully in 12 months time things will have settled down to a happy medium of the two.
Fingers crossed, there seems to be a lot of scare stories in the papers and press at the moment.From the seminar's I've been to, most lenders right now are interpreting MMR differently meaning that lending decisions are going to vary wildly from lender to lender. Most of them have also said that they expect to see a relaxing of the regulations over the next few months as lender realise that some of the criteria they have deployed is ridiculous.
With regards to the other parts of your post; lenders expect people to have outgoings, they understand that there are costs of living. It's the undisclosed commitments and larger than normal costs than lenders are trying to weed out.
Pre-2007 was like the wild west and currently it's like a Nazi state. Hopefully in 12 months time things will have settled down to a happy medium of the two.
Tophatron said:
This might be an "unknown unknown", but how much will things like eating out etc. impact it (i.e. spending that can easily be curtailed as necessary)? Or is it mainly looking to work out your commitments - regular payments you're going to have to make each month?
from my experience with hsbc, its essential stuff. its pretty fair and common sense imo. Its just nobody is used to it. eliot said:
from my experience with hsbc, its essential stuff. its pretty fair and common sense imo. Its just nobody is used to it.
^^This.People shouldn't be worried about things like eating out. For years lenders have simply taken salary multiplied it by 4 or 5 and then deducted any credit commitments that people have to arrive at a lending figure. What they have never really taken notice of is what other REGULAR commitments does the applicant have such as childcare, CSA payments, petrol bills etc.
Interestingly we just ran a detailed affordability calc pre-DIP with a mainstream lender for an FTB with 40% deposit, and her £195 pm car loan with 24 months remaining reduced the borrowing limit by £34,000. Ironically if she agrees to repay the car loan at completion they will lend her enough to do so! She is therefore in the Catch-22 of either paying off her car loan o0ver 25 years or not buying a house for 2 yrs until she is car-loan free!
As Sarnie pointed out the new calcs are assessed against the impact on disposable income, this applicant is single and doesn't earn a fortune (mid £20k's) so the car finance is c. 10% of her disposable income.
As Sarnie pointed out the new calcs are assessed against the impact on disposable income, this applicant is single and doesn't earn a fortune (mid £20k's) so the car finance is c. 10% of her disposable income.
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