Is more knowledge about the new mortgage rules needed?

Is more knowledge about the new mortgage rules needed?

When the Mortgage Market Review was brought in with new rules in April of this year, it was generally accepted that these were a fantastic move to protect the future of a property market that was really starting to pick up pace again after a number of years of negativity. 

Designed to make sure that the mortgage providers across the nation are lending responsibly and checking that people are able to afford to repay a mortgage - along with future forecasting to ensure this - the rules in theory should mean that the market doesn't have the same sort of crash seen in 2008, which was largely blamed on irresponsible lending for years beforehand.

But have the rules been publicised enough? According to a new survey released this week, it looks like this is not the case, as it has been claimed that as many as half of those who are looking to get a house purchase loan are not aware of the intricacies of the rules and how it will affect their ability to get approval. 

The research from TSB shows that of those who are aware of the new Mortgage Market Review Rules, the majority are still not totally au fait with the impact it can have. 

Some 41 per cent of respondents said that after hearing the basics of the changes, they will try to only borrow a figure which they are able to realistically afford, while three per cent still had no clue about what the changes to the rules would mean for them.

However, the bank also said that its survey showed just how beneficial a detailed explanation can be moving forward, because those who do have knowledge of the rules show a much more reasoned and sustainable approach to their mortgage application, which can only be seen as a positive for the market as a whole. 

Of those who were surveyed who knew about the changes to the rules, some 53 per cent said that they will be making sure to save up more before they apply than they might have done otherwise.

In addition to this, some 49 per cent said they will take time out to make sure they check their credit report before they apply, while 45 per cent will do more research than they might have done in the past in order to ensure they can afford what they are applying to borrow. 

Finally, some 29 per cent said that they will be looking to clear their existing debt before they apply to give them a much better chance of approval, while 21 per cent would prioritise making sure that they are on the electoral roll. 

"Though the Mortgage Market Review is usually recognised as a positive change by people who understand it, many still have worries as it remains shrouded in mystery," said Ian Ramsden, TSB mortgages director.

"We say don’t panic, but do prepare for your mortgage application with some straightforward, simple steps. Break down your finances, work out how much you can afford and aim to future proof your mortgage as far as possible by discussing plans with your mortgage adviser," he told potential mortgage applicants.