Affordability rules baffle half of FTBs

A new report from Equifax has revealed that an alarming 48% of those about to take their first step onto the property ladder are not aware of how the mortgage affordability rules might impact their mortgage application.

Related topics:  Finance
Warren Lewis
17th March 2016
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According to the data, of those who are currently in the process of applying for a mortgage, 18% have missed payments on credit agreements, 13% believe they have too many credit agreements, with the same percentage believing they have too few credit agreements.

The research also revealed that raising a deposit remains a major challenge for first time buyers. 37% of the first time buyers surveyed had managed to save between 5% and 10%, but 28% had saved less than a 5% deposit or none at all. Nearly a third (29%) are getting help with their deposit from family or friends.

Lisa Hardstaff, credit information expert at Equifax, commented: “The reality is that mortgage lenders will take a good look at a person’s financial situation when assessing an application. This includes looking at information on their credit report. And if they have missed or made a late payment on a credit or service agreement, this could be a cause for concern for prospective lenders. Also having too many credit agreements could indicate a person is financially overstretching themselves, too few, and a lender may find it difficult to assess how the person will perform with repaying their mortgage.

Lenders also have a duty to assess the long-term affordability of an applicant – will they be able to meet their repayments now and in the future. Yet nearly half of the first-time buyers, who responded to our survey, weren’t aware of how these rules might affect their application."

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