Last year, UK had regulated a newest of mortgage rules regarding buying and selling that made it difficult for UK buyers. New research shows that two-thirds of the would-be buyers in the UK do not understand these new rules. Around 31 percent of the buyers who had intended to buy properties in two years' time were not aware of the change in mortgage rules as stated in a report by Gaspark. Although the ruling had been overhauled over a year ago, 35 percent of the buyers did not know the regulations had changed.
After a decade, the biggest change in the rules came April 2014 brought by the Financial Conduct Authority. The change demands the lenders to ensure additional steps to ensure borrowers can only get mortgage they can afford. Propertywire reported that lenders have to be stricter in scrutinizing borrowers of their incomes and expenditures such as childcare, holidays, and entertainment. About 70 percent of those being assessed were not aware that lenders are obligated to look into their spending. Yet, 25 percent of those being questioned expressed that they spending remains the same to help them qualify for a mortgage.
More than a fifth of those potential borrowers who did not know about the required assessment have cut contribution to life insurance and pension to have more money on their bank accounts.
Although the new ruling has been already circulating for more than a year, buyers are still in the state of confusion. There are a lot of people who are preparing to apply for a home loan, but are not aware of the new mortgage rule. Borrowers are facing difficulty because of the harder procedure to obtain a loan.
Spokeperson of Ocean Finance, Gareth Shilton has expressed the need to educate the buyers and to guide them through the correct process. Furthermore, Shilton exclaimed that for those who want to apply for loan next year, their finances must be in order, and their credit file has to be checked.