New mortgage affordability checks will take up to 3hrs

By Christine Farrell

The new mortgage affordability quiz has been implemented by mortgage lenders as of 26th April, and has already come under criticism for the delays it causes. Concerns have also been raised that the strict approach could lock viable mortgage applicants out of the property market.

The aim of the extended list of questions to be asked of potential mortgage borrowers is to get a fuller picture of their expenses in order to ensure they can afford it, even if interest rates should increase significantly. Whereas the mortgage application process previously put a lot of responsibility on the applicant to assess their ability to afford the monthly loan commitment, the new questions essentially pass that burden to the lender.

Mortgage applicants will now face an interview lasting up to 3 hours, and will be asked about monthly subscriptions and other expenses in detail. But aside from the obvious delay that the increased questioning will create, concerns have been raised that relying on a computer to assess the risk factor of applicants could result in unnecessary rejection of mortgage applications.

In particular there has been criticism that fairly innocuous historic debt could result in an automatic refusal. An anonymous couple with a joint income of £200,000 are said to have been refused a £600,000 loan on a £1million property because of a £48 unpaid mobile telephone bill that had been generated fraudulently in their name. The fraud was discovered and dealt with, but the black mark was never removed from their credit record despite them being told it would be.

Others have defended the new lifestyle quiz saying it should have been implemented earlier, and saying that any inconvenience caused by a longer interview process is justified in order to accurately assess the ability of the mortgage applicant to afford the monthly payments. They say that the mortgage applicants who will complain about being rejected as a result of the new lifestyle quiz have in fact been protected from themselves.

The new questions have only been in place for a few days so it is expected that more anecdotal information will be publicised in the coming weeks as new mortgage applicants go through the process and receive the lender's confirmation if they have been successful or not.

If you are buying, selling or remortgaging a house in Northern Ireland, and require a property conveyancing solicitor to handle the legal process for you, contact Wilson Nesbitt in Belfast by calling 0800 840 9290.