The Mortgage Review was introduced to reform the mortgage market, so that consumers can be assured that lenders will only approve a product if they are sure it is affordable. Previously, while most people took on mortgages which were affordable, others were given products which weren’t sustainable and resulted in properties being repossessed. The reforms aim to help people have access to affordable mortgages, without high risk lending practices. More regulations are also to be introduced, with the Mortgage Credit Directive in March 2016.

What does this mean for customers?

The MMR was finally introduced in April 2014, and from that time consumers faced much tougher lending criteria. Although the new regulations have been put in place to protect consumers from taking on debt which isn’t sustainable, the new rules can also make it much tougher for people to obtain a mortgage. For most people, a mortgage adviser is the best option as they have undertaken CeMAP training and can advise the most suitable products.

How are lenders affected?

Although an adviser may conduct an affordability check, the lenders will still have full responsibility for lending. A customer’s income has to be verified and checks carried out before approving a loan. Interest-only mortgages may still be offered under the new rules, but only if the borrower can demonstrate that they can repay the loan at the end of the term. Re-mortgaging may also be a problem under the new rules, unless staying with the same lender and not increasing the amount borrowed.

As the new regulations have made it much more difficult to obtain a mortgage, many people require advice from a professional.

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