24 April 2014

Two days till MMR! Time to use a broker..


I don’t think I can talk about anything else this week apart from the launch of MMR.   The Mortgage Market Review comes in to effect on April 26th and will fundamentally change the way a lender looks at a mortgage application.   Amongst a number of new rulings, one area being reviewed is affordability, a key element when arranging a mortgage.  The MMR takes this a step further in also requiring a lender to predict affordability into the future.  For example, will any material changes occur in the next five years; how much will you spend on seasonal commitments this year; will you need to consider an increase in property size to meet family requirements?  These are just some of the more intrusive questions that are to be explored when budgeting for a mortgage.
As lenders new systems are released, we are also noticing the phasing out of income multiples and the introduction of affordability models.   So, no more “4 x income” conversations!  The amount you can borrow will depend on your monthly net income against expenditure and living costs and the lender will be the judge of what they think you can afford! 

One thing is for sure in that the time taken up in research and recommendation for a suitable mortgage product might just start to increase as each lender advises their differing requirements!   
As such, we’re hearing that mortgage appointments with local banks or building societies are now taking well in excess of an hour (some up to three hours!).  Sadly, if for whatever reason, that lender cannot not offer the customer what they want, the customer may have to approach another lender and sit through another hour or so possibly to find that they too cannot help, and so on.  This raises the spectre of a large commitment to time for the consumer without a satisfactory solution.  This is where independent and whole of market brokerages come into their own.  They will be able to offer you access to a number of lenders, including the high street names, if appropriate, and you only need to have one conversation with the same person.  In addition, they should have access to lenders who will manually assess your needs rather than a ‘computer says no’ type scenario, if required.  Independents, like us, have access to a number of limited distribution lenders and exclusive products not readily available to the wider mortgage market!

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