New rules set to regulate mortgage lending set to be introduced

The Financial Services Authority (FSA) has announced that new rules are likely to be introduced in 2013 to make sure lenders aren't recklessly lending money to those that can't pay it back

----, ID (prHWY.com) December 23, 2011 - The Financial Services Authority (FSA) has announced that new rules are likely to be introduced in 2013 to make sure lenders aren't recklessly lending money to those that can't pay it back.

The proposals say that lenders will have to more carefully assess mortgage applications, to check that each applicant can realistically repay the amount they are borrowing. As well as completing a mortgage calculator, lenders have to assume that interest rates may rise and not let borrowers rely on the possibility of an increase in house prices.

Before the financial crisis, mortgage lending was often unregulated and some lenders were not performing enough checks to see if homeowners could pay back the amounts they were borrowing. Some of the more irresponsible lending included loans of 125% of a property's value, "self-certification" loans which allowed people to exaggerate their income and mortgages worth seven times a person's annual salary.

However, although the proposed changes may make it more difficult for some people to get mortgages, the FSA has also said that lenders will no longer have to consider in detail a potential homeowner's spending. In previous years, after establishing someone's salary after using a tax calculator, mortgage applicants had to give detailed information on all their spending which included both the cost of essentials such as bills and spending of disposable income but under FSA proposals, only essential payments will be looked at.

No changes will be introduced before the public consultation has finished at the end of March next year and if you're looking for a mortgage before the changes are brought in it is vital to spend time using a calculator to work out how much you can borrow and find the mortgage that suits your requirements.

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Tag Words: calculator, tax calculator, mortgage calculator

Categories: Business

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