Rental payments not sufficient for demonstrating mortgage affordability

A petition with over 100,000 signatures asking mortgage lenders to accept rental payments as proof of mortgage affordability has been rejected by the government.

Jamie Jack Pogson, who created the petition, says he wants “paying rent on time to be recognised as evidence that mortgage re-payments can be met”.

He added: “Since living on my own I have paid £70,000+ in rent on time yet still struggle to get a mortgage. Unless you’re getting handouts, wealthy or in receipt of inheritance it’s almost impossible.”

The parliamentary debate determined that a variety of factors must be taken into consideration when assessing a mortgage application and that meeting rental payments was “not sufficient in itself” to demonstrate affordability for a loan.

The government have advised that the affordability assessment must take account of factors such as; borrower’s income, household expenditure, and evidence to prove the ability of the borrower to meet mortgage payments if interest rates were to rise.

In its response, the government said: “It is important to be aware that home ownership brings a number of additional expenses that may not be incurred when renting, including maintenance costs and buildings insurance. Before extending a loan, lenders must satisfy themselves that a borrower will be able to meet these additional on-going costs when considering a mortgage application.

“Beyond the FCA’s requirements, decisions around the availability of individual mortgage loans remain commercial decisions for lenders, and the government does not seek to intervene in these.

“Whilst one lender may be unable to offer a mortgage, being denied a mortgage from one provider does not preclude a customer from being offered credit elsewhere. There are a wide variety of mortgage products available in the UK and prospective borrowers may benefit from shopping around.”

Full article available on Property Reporter:

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