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Mortgage market review

The mortgage market review (MMR) was introduced to reform the market and protect consumers from the reckless mortgage lending seen in the industry, that could leave them unable to meet their mortgage repayments.  In the past, some people were granted mortgages that they could not afford.  This led to some falling behind with their payments or losing their home.

New MMR rules which came into force on 26 April 2014 are designed to make sure that when you take out a mortgage it suits your needs and circumstances including whether you can afford it or not.

A mortgage lender must check that you can afford your repayments both now and in the future.  To do this they will assess your application according to various criteria, but the following could help you secure the deal of your choice:

Debts aren’t helpful
Reducing any outstanding debts your have prior to applying for a mortgage will demonstrate that you are managing your finances responsibly and will ultimately make it more likely that any mortgage application will be accepted.  It could also mean that you will be able to borrow more as your regular disposable income will be higher.

Your credit report is important
Obtaina copy of your credit report prior to applying for a mortgage.  You can obtain a copy using established agencies such as Equifax or Experian.  By reviewing your credit report you will be able to see what a mortgage lender will see following an application being made.  If your credit rating isn’t looking too healthy, then take action and do what you can to improve it.

Prove your address history
It is important to be registered on the electoral roll if you are considering applying for a mortgage as not being on this could affect a lenders decision regarding your credit worthiness.  Many people don’t register or simply assume they’re registered automatically when this is not the case.  The reason for its importance is that credit reference agencies use the information from the electoral roll in order to confirm your identity.  This information is then passed on to a mortgage lender when you apply for credit.

Deposit, deposit, deposit
When it comes to your deposit, bigger is definitely better.  The more you can save to use as a deposit, the more mortgage options you will have.  Not only will a larger deposit result in lower monthly payments but lenders also reserve their best interest rates for those with bigger deposits.  Although there have been some signs of life in the market for 95% mortgages, most of the competition is at lower loan to values.

If you are not saving each month, try to do so.  Draw up a budget planner and work out if there is any non-essential spending you can reduce to increase your disposable income.

Let our advisers save you the time as well as the hassle of shopping around.  One call to us and we search the whole of the mortgage market for you, so you don’t have to.