In the UK, about 12% of potential property buyers either can’t get a mortgage, or can’t get the one they want due to strict lending rules which the Bank of England is thinking about relaxing.
If the Bank of England approve the discussions about relaxing these stricter lending rules, the changes should mean that more people will be able buy houses and get on the property ladder.
The current stricter Bank of England rules mean that for anyone applying for a residential mortgage has to be able to afford the monthly mortgage repayments, if mortgage rates rose in the future.
What this meant is historically in the background was that borrowers had to be able to generally afford mortgage rates of 3% plus their lender’s ‘standard variable rate’ (SVR) as part of the application process of applying for a new mortgage.
By way on an example, if you applied for a mortgage with Halifax, one of the UK’s biggest lenders, a borrower would have to be able to afford mortgage repayments of 6.99% a month. (3% plus the lender’s SVR of typically around 3.99%).
The Bank of England is now consulting on removing this rule completely.
There are fears that relaxing this rule could increase house prices and with the recent base rate rises of interest, rather than removing the rule totally, reducing the background calculation rate might be a more prudent idea.
Outside of the possible rule change, there are other options currently available to potential mortgage borrowers to increase the lending available to secure their dream home. By way of an example, some mortgage lenders will allow you to borrow more if you opt for a 5-year fixed rate mortgage deal.
Our expert mortgage advice team are here to help you, and because they search the whole of the UK mortgage market they can help you save time and money too. If you’re based in Norwich or Norfolk, our Mortgage Brokers offer face to face meetings (video and telephone appointments also available)
You can also live search for a new mortgage deal here:
https://www.broadlandconsultants.com/search-mortgage-deals/
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
