In recent weeks, a number of reports have surfaced suggesting that the tougher mortgage rules introduced earlier this year may be causing significant problems for older buyers, who are said to be finding it increasingly difficult to secure mortgages.
The new mortgage rules, introduced in April of this year, require lenders to adopt a more stringent approach, and take further steps to prove their customers’ ability to pay off their loans.
According to The Independent, the Intermediary Mortgage Lenders Association (IMLA) has expressed concern that those applying for a loan, which is likely to remain outstanding once they reach retirement age, may be turned down. Consequently, it’s predicted that a growing number of older applicants could be facing a negative response.
This is because lenders need borrowers to prove they have a regular income that will allow them to make repayments. And banks are concerned that they cannot guarantee borrowers will be able to keep up with their mortgage payments once they’ve reached retirement, and are relying on a pension as their source of income.
Significantly, in recent years, due to factors such as rising house prices, there has been a trend towards longer mortgage terms. Additionally, more and more people are also waiting until later in life before getting onto to the property ladder, meaning that the number of people potentially affected is rising. According to some reports, even those in their 30’s could find themselves being turned down for a home loan, depending on the length of term they apply for.
One potential solution is for buyers to reduce the term of their mortgage, however, the downside of this is that they will likely face higher monthly repayments, leaving many older buyers facing a dilemma. Though, according to This is Money, the Financial Conduct Authority (FCA) has warned lenders against taking a “computer says no” attitude towards older borrowers.
If you are looking for a mortgage then here at Search Mortgage Solutions we can help. Our Manchester-based Mortgage advisors can give you the best advice, and find the most appropriate mortgage for you, to suit your individuals needs and requirements. So if you’re looking for a mortgage broker in Manchester please don’t hesitate to contact us, and a member of our expert team will be happy to help you with your enquiries.