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Age now plays a part in mortgage approvals

With reports of lending by the UK’s biggest building society down for the first half of its financial year, the new Mortgage Market Review (MMR) regulations imposed in April seem to be having an effect by curbing borrowing.

Further news is that many lenders are now imposing stricter rules about the age of an applicant and these strict affordability checks meant that customers aged over 40 who were seeking a standard 25-year mortgage would find that their options will be severely restricted in future because they would be at retirement age before the loan was repaid.

The thinking behind this age reacted restriction, was that with uncertain pension incomes, it would be difficult for lenders to assess borrower’s ability to be able to maintain the repayment figure, particularly in light of new pension freedoms which will come into effect next year.

The Intermediary Mortgage Lenders Association (IMLA) is quoted as saying “that under current rules, lenders are required to “take account of future changes to income or expenditure when assessing affordability”. The major concern of lenders is that these regulations mean that following the spirit of MMR with new customers, means that they are being hampered by the very real concern that this could come back and be cited against them.

This has to be a major concern for borrowers now, as late thirties is the age when most couples today are hoping that they have enough deposit and income to set foot on the housing ladder.



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