Legal News

Homebuyers are being made to wait for up to two months for the result of their mortgage application, as lenders examine paperwork detailing their outgoings, including spending on leisure activities such as gym membership.

The Bank of England pressed for tougher tests for homebuyers to make sure they could afford their mortgages and did not over-extend themselves financially when buying a home under the government’s Help to Buy scheme.

The scheme enables homebuyers to buy a new property up to the value of £600,000 with a 5% deposit.

It was feared Help to Buy would fuel another property bubble and a subsequent property crash once interest rates went up.

Stringent tests for mortgage applicants were introduced in April 2014, to make sure they could afford to repay their mortgages once interest rates started to climb.

However, one impact of the new stringent tests for mortgage applicants – known as Mortgage Market Review (MMR) – is a long wait for the results of their application, as lenders examine the paperwork they submit with their mortgage application.

A two-month wait for a mortgage approval decision could mean homebuyers lose out on an affordable new home they wish to buy, in an increasingly competitive property market.

Mark Hayward of the National Association of Estate Agents told the Daily Mail:

“MMR is delaying the mortgage process – and anecdotal evidence suggests that it’s taking in excess of 50 days from application to mortgage offer.

“As a result, this delays sales and results in uncertainty – plus, the lengthier the process, the greater the risk of a sale falling through.”

MMR has also impacted on the time it takes to buy a house – the process usually takes between six to eight weeks, but longer deliberation over mortgage applications is adding another two weeks to the process, which was speeded up to under eight weeks when online conveyancing was introduced.

Mortgage broker Andrew Montlake from Coreco said homebuyers were becoming frustrated with “the sheer volume of paperwork involved”.

He added that most homebuyers are now required to submit a minimum of three months’ worth of bank statements to mortgage lenders when applying for a home loan.

”We have undoubtedly seen an increase in timescales because of the amount of documentation they need to provide,” said Mr Montlake.

“It then takes time for the lender to check the statements for any additional, undeclared spending, such as direct debits or regular payments.

“The time it takes to approve applications has improved slightly since the MMR was first introduced, but it is still causing delays.”

Duncan Lewis Housing Solicitors

Duncan Lewis housing solicitors are a leading firm of property lawyers able to advise homebuyers on issues such as debt management and mortgage repossession.

Duncan Lewis housing solicitors also offer competitively-priced conveyanicng services to homebuyers, including guiding first-time buyers through the conveyancing process.

Duncan Lewis can also advise on making claims for professional negligence relating to property transfers, including claims against conveyancers, surveyors, builders, estate agent and architects.

For expert legal advice on housing law, call Duncan Lewis housing solicitors on 020 7923 4020.