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Help, I am applying for a mortgage!

Help, I am applying for a mortgage!

New regulations relating to applying for mortgages came into action last April, making it harder than before to have be accepted due to the credit crisis.

The Council of Mortgage Lenders issued these five guidelines designed to help us fully understand the level of money being borrowed and the importance of exactly what we are signing up for when trying to get a mortgage. This process does see more paperwork, so in a fast moving market, getting your paperwork done in advance and planning can mean the difference of a sale being agreed or losing a buyer or property.

  1. Taking out a mortgage could take longer than before. This is because most mortgages are sold on an ‘advised’ basis. The new rules are very strict about giving advice, with an advised sale possibly taking up to two hours.
  2. You will need to provide more details about the incomings and outgoings of your finances. The new rules require an in depth d assessment of whether your mortgage is reasonable both now and in the future.
  3. The new rules could affect how much you are able to borrow. This is due to lenders being required to ask detailed and thorough questions about your spending, including what you spend on your utilities, council tax, ground rent, insurance and running a car. They will also have to make a realistic estimate on your other living costs, including clothing, household goods, childcare costs etc.
  4. You will be able to apply for a mortgage on an “execution-only” basis, but there are strict rules to make sure that you understand the process. You will need to show that you have researched the market and understood the structure of the mortgage you want to take out.
  5. It’s possible for you take out an interest-only mortgage, but this will remain a niche offering. Lenders continuing to offer interest-only mortgages need to ensure that you have a credible plan for repaying the loan when it develops.

If you are looking to get a competitive rate on a new mortgage, re-mortgage, home insurance or just to save money for your household, the Zoopla Finance Centre will be able to give you advice.

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