The research by Equifax revealed that 32% of those who have yet to apply also said they would find it fairly difficult to obtain evidence of all the expenditure information they believe a lender needs to assess a mortgage application.
As figures suggest house buying is at its busiest during the spring, 69% who responded to the survey also expressed concern that more detailed affordability checks would affect the amount they could borrow. 40% are also worried about the time it will take to complete their mortgage application.
The responsibilities placed upon lenders, which came into effect in April 2014 as a result of the Mortgage Market Review, place even greater onus on the lender to assess an applicant’s ability to repay. The applicant’s credit history is likely to play a crucial role in that assessment, alongside other information gathered as part of the application process.
Laura Barrett, Equifax Consumer Affairs said:
“It is important to remember that lenders will take into account the information provided on the application form and will look at an applicant’s income and outgoings to ensure they can afford the mortgage they are applying for, now and in the future. However, our research suggests that 22% are still unconvinced that the new affordability rules will help prevent homeowners overstretching themselves in the long term.
“We would recommend compiling any financial documents and expenditure information needed to support a mortgage application, as soon as the application process starts. Advance preparation will hopefully avoid any unnecessary delays.
“A lender will typically look at an applicant’s credit history when determining whether they meet eligibility criteria and may also use credit information during affordability assessments. Therefore, it is suggested that individuals check their credit report before making any applications to ensure that it is in the best possible shape for them.”
Jeremy Duncombe, Director, Legal & General Mortgage Club, added:
“It’s no surprise to see mortgage and remortgaging among the biggest concerns for UK adults.
"House prices increasing at way over the rate of inflation have made the prospect of home ownership remote for many adults. There is help out there, with initiatives like the recently announced ‘Help to Buy ISA’ for first time buyers building on other recent measures designed to help FTBs to get on the property ladder,
"Meanwhile, the low interest rates that many lenders are offering and the reduction in stamp duty mean that now is a good time to consider mortgaging. It is inevitable that rates will go up and these deals will not be around forever. Therefore, those that are looking to remortgage should speak to an adviser who will be able to help them find the right deal for their circumstances.”
“Having said that, low interest rates and Help to Buy alone won’t solve the housing shortage the UK is experiencing. The UK needs around 220,000 new houses to be built each year to tackle this issue.”
