Mortgage Affordability Test
Published / Last Updated on 12/07/2010
by Ashley Clark, Director
The financial services regulator, the Financial Services Authority (FSA) has proposed that all mortgages must have an affordability test based upon a repayment mortgage.
In research, the FSA found that half of all mortgages taken out between 2007 and 2010 had no proof of income supplied by the borrower.
It also found that nearly half of all households had little or no money left after bills and mortgages were paid. Literally, there is no room for error and many face getting into difficulty easily.
Affordability Test
The new test will mean that a lender must assess a clients ability to repay a loan by checking income and expenditure.
Our view
This is nothing new. The “Suitability and Affordability” test has been around since mortgage regulation started on 31 October 2004.
The failure is both on the regulator, lenders, mortgage brokers and clients to ensure the affordability. We have not seen any heads roll given that many have breached MCOB regulations (Mortgage Conduct of Business Rules) from day 1.
Useful links:
Contact us - Book Callback - Free Consultation - Newsletter - Money MOT - Discounts
