New changes in Mortgage applications may make it harder for people to obtain a loan. The new rules mean that all applicants must undergo a ‘stress test’ to see if they can afford to pay off their mortgages if interest rates rise.
Although the rules don’t come into action until April many banks have been adopting the changes early and have been ‘stress testing’ applicants with the idea that interest rates will rise 7% in the next 5 years.
Applicants finances will also be more closely scrutinized with day to day finances and spending such as food, bills, wages and debt being forensically examined. Factors which were not checked before such as student loan debt, can now affect whether an applicant is accepted or not.
Despite the new changes David Hollingworth from mortgage advisors London and County says ‘it is not impossible to get a mortgage’. Mr Hollingworth also say that the time an application takes to process may now increase as a result of the extra financial checks.
Source: This is Money by @lee_boyce and @beckymbarrow
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