The Chief Executive of Britannia Building Society has called for mortgage lenders to be more prudent with the amount of money they lend. Due to house prices rocketing and the competition for mortgage business, some lenders are offering borrowers up to five times their income, in order to get a mortgage. The usual lending amount is around three times income.
The problem with being able to borrow more than normal will hit people if interest rates rise and they are not on fixed rates. As interest rates rise, so will mortgage payments and the higher the mortgage, the higher the payments
.If you are looking to borrow for a mortgage, take into account the fact that interest rates could rise and check you will be able to afford the payments. Also, make sure your mortgage and bill payments are protected against redundancy, accidents and sickness.
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