Moneytree Wealth Management
Image for Mortgages

Mortgages

Like a lot of financial products, the mortgage market is complex. As well as the huge amount of mortgage products to choose from, the way they’re processed can be confusing and time-consuming.

Since 2014, lenders now have to prove you can afford your mortgage repayments. They do this by looking at the income coming into your household alongside how much unsecured debt you have outstanding, and other expenses like utility bills, child maintenance and school fees.

Lenders will also ‘stress test’ your finances to predict what would happen if your mortgage payments were to increase significantly. This takes life-changing events, like having children, and lifestyle factors into account.

During these affordability assessments, you’ll be asked to provide paperwork (e.g. bank statements and P60s or tax returns if you’re self-employed) to prove your income and to complete a questionnaire. A credit search will also be carried to check how well you’re managing your credit cards and loans. 

Once all that’s all been done, the mortgage provider will decide whether to approve your application or not. It could also affect the mortgage term and rate too.

Would I need to do this if I’ve already got a mortgage?

Yes. Even if you’ve been paying a mortgage for years and want to re-mortgage, you’ll still need to undergo an affordability assessment.

Your home may be repossessed if you don’t keep up with repayments on your mortgage.