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5 Jan 2015

Do you know how MMR impacts you?

Author: Greg May

Nearly half of Romans’ customers don’t understand the effects of the Mortgage Market Review (MMR) reforms, which launched on 26th April 2014.

Out of the 650 buyers, sellers, landlords and tenants that responded to Romans’ latest survey, 47.6% voted ‘Disagree’ or ‘Unsure’ when asked to respond to the statement I know how the Mortgage Market Review will impact how much I can borrow.

The reforms were introduced to ensure a continued access to mortgages for the great majority of customers who can afford it while preventing a return to poor practices seen in the past. The main changes are:

  • Customers looking to get a new mortgage to buy a home, increase their current mortgage, or remortgaging need to prove that they can afford the mortgage
  • In order to borrow an interest-only mortgage there will need to be a credible repayment strategy

It’s important to know how much you can borrow before you start your property search and Romans encourages buyers to seek professional advice from mortgage advisers as early as possible.

“It’s tempting to make a stab in the dark and guess how much money you can borrow based on your current financial situation and the assumption that you can get five times your salary” comments Greg May, Romans Mortgage Services Director. “However, lenders have moved with the times and with the introduction of MMR,  thorough screening processes are taking place, taking many different things into account, before a decision on how much you can borrow is made.

“Although this can mean the process takes longer, all decisions are based on affordability, so in the long run you will only be borrowing what you can afford.

“Some customers are concerned that the reforms will stop them from getting a mortgage at all, but everybody’s situation is different and without expert advice you will never know where you stand.”

If you’re thinking of buying a property in 2015 Romans is advising you to:

  1. Make sure you get advice early

You need to ensure your finances are in order, ideally six months before you apply. This shows the lenders you are able to uphold a healthy bank account and maintain regular direct debits.

Ensure you know how much you can borrow before you start the search for your new home.

Most mortgage transactions will take place on an advised-basis rather than the lender presenting you with several options to choose from. Due to the demand to see a qualified mortgage adviser we recommend you book your appointment early.

  1. Use your time efficiently

The application stage will now take longer. This is due, at least in part, to the length of time it will now take a lender to underwrite your application. By speaking to an adviser who can look at the whole of the mortgage market, you will avoid having to do this more than once.

  1. Ensure you get the right advice

The amount of money you could borrow, and the choice of mortgage products available to you, could be influenced by whether you speak to an adviser who has access to the whole of the mortgage market or directly to one lender.

Find out more with Romans’ Mortgage Market Review Fact Sheet.

As independent mortgage brokers Romans Mortgage Services advice is totally impartial and the advisers search the whole of the mortgage market to find the deal that suits your circumstances and budget. All paperwork is handled in house so there’s no need to worry about meeting deadlines or being left to read through lengthy documents on your own.

For impartial advice on the Mortgage Market Review reforms contact Romans Mortgage Services on 0118 953 8750.

Your home may be repossessed if you do not keep up repayments on your mortgage.

There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.


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