Legal News

Intrusive new checks on expenditure by mortgage applicants are due to come into force this weekend – including the amount of money a mortgage applicant spends on lifestyle choices such as gym fees or even mobile top-ups.

Under the Mortgage Market Review, lenders will be able to quiz mortgage applicants about their spending in depth, to make sure homebuyers are able to withstand any increase in mortgage interest rates.

Some lenders are already calculating a mortgage applicant’s ability to repay their mortgage at higher interest rates of around 7% or above.

The government’s Help to Buy scheme is being blamed by some critics for helping to create a housing bubble, with homebuyers able to purchase homes up to £600,000 under the scheme, with just a 5% deposit.

The government also guarantees part of the mortgage, but in the New Year some lenders called for an exit date for the scheme over fears that some homebuyers might not be able to repay their mortgages once interest rates begin to climb again.

The Bank of England has also called for a review of the Help to Buy scheme amid fears that it is continuing to help fuel a housing bubble.

More stringent financial checks on mortgage applicants could help cool the housing market, say economists – in the last year house prices have risen by nearly 18% in London and by an average of 9.1% across the rest of the country.

Duncan Lewis Housing Solicitors

Duncan Lewis housing solicitors can advise on a wide range of housing and property matters, including debt and mortgage repossession, as well as Landlord & Tenant issues and disrepair of rental property.

Duncan Lewis can also advise on Local Authority housing and housing benefit, as well as housing possession and unlawful eviction.

For expert help with housing law, contact Duncan Lewis housing solicitors on 020 7923 4020.