MORTGAGES and the MORTGAGE MARKET REVIEW (MMR). MORTGAGES IN PRINCIPLE NOT HONORED. The MMR has slowed down the Mortgage Market. Since my last post on this subject quite a few people have been in touch with me directly by email, messaging and those who know me well by telephone, regarding their position having been granted a mortgage in principle before the new MMR rules were introduced. I am not a financial adviser, but someone who researches changes in rules and legislation. It would appear that many lenders are not honoring mortgages made in principle that were made before MMR rules were introduced. The biggest one of these is the Halifax Bank of Scotland Group which takes in Lloyds, TSB, Birmingham Midshires etc: SO IF YOU HAVE A MORTGAGE IN PRINCIPLE MADE BEFORE APRIL 2014 YOU NEED TO CONTACT YOUR LENDER TO SEE WHAT YOUR POSITION IS, many people will have to reapply under the new rules. See theguardian/money/2014/apr/25/mortgage-rules-homebuyers-fca-rules Another point of valuable information is fca.org.uk/ Lenders no longer take multiples of gross income into consideration i.e. single person 4 X gross salary couple, 3 X combined Gross salary, they now look at affordability on net earnings and and expenditure what your future plans are for instance are you planning a family or having more children are you considering retiring before your normal retirement age, some people on defined benefit (Final Salary pensions) can retire at 50, 55 or 60, if they do, this will have profound affect on their future earnings, those who reach the nominal ages of 50, 55 and 60 within a few months of applying for a mortgage under MMR rules there retirement plans will be verified with their employer by the lender. The lender is also compelled to do a stress test under the MMR rules whilst the present base rate is 0.5% the stress test will do a calculation to see if you can afford the repayments on a mortgage rate of 7.0%. There is an almost endless list of expenditure you may have to include. As an example an ex colleague of mine and his wife both retired at 50 with joint pensions of Just over £30,000 per year, they wanted to up size so had a considerable amount of equity in their existing property, but needed an additional mortgage, they failed the income and expenditure test on the mortgage they needed. They got the house they wanted, but had to put their joint lump sums into the equation, which they were going to use for a cruise and series of holidays. YOU NEED TO CHECK WITH YOUR LENDER OR FINANCIAL ADVISER TO SEE WHAT YOUR PRESENT POSITION IS ON GETTING A MORTGAGE. Do it tomorrow.
Posted on: Sun, 09 Nov 2014 16:46:51 +0000
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