You can do so much online now: book cinema tickets; reserve a table at a restaurant; pay someone. But can you apply for a mortgage online too?
The answer is no, but for very good reason.
Protecting your finances
As a result of the credit crunch, the Mortgage Market Review (MMR) was launched by the Financial Conduct Authority to ensure that people couldn’t borrow beyond their means and then be left at risk of losing their home when they couldn’t keep up with the repayments. Part of this safeguarding was the introduction of strict guidelines for mortgage providers to follow so they could ensure their customers were offered the mortgages that best suited their circumstances.
The new rules govern not just mortgages, but also remortgages. And these changes should give you peace of mind that by approving your application, your mortgage provider is as satisfied as possible that you can afford your repayments – as if you don’t keep up with your repayments your home could be at risk.
Why can’t I just apply online?
When you can do so much online, why can’t you apply for a mortgage? Well, it’s because in order to properly assess your financial situation and your needs, a mortgage provider needs to speak to you. Following the introduction of the MMR, lenders are required to take a more in-depth look at applicants’ circumstances and finances. To do this, they need to speak to you and ask questions.
Areas you might be asked about include your monthly expenses like utility bills, council tax, childcare and travel costs and whether you’re making any other debt repayments. You might also be asked to provide a more in-depth summary of your regular expenses. Along with this, you’ll need to provide proof of your earnings.
All this information is used by the lender to calculate how much you’ll be able to comfortably repay each month, and from this they can work out how much you can afford to borrow.
This may all seem like a hassle, but it shouldn’t. In fact, the guidelines introduced by the MMR are helping to make the mortgage market fairer and safer. By using the information you supply to build up a picture of you as a borrower, lenders can make sure you’re not having to stretch yourself too far to repay what you’ve borrowed.
And while you can’t apply for a mortgage with just the click of a mouse, applying might not be the time-consuming chore you imagine. For example, if you apply for a mortgage through Ocean Finance, you simply need to fill in a short form and we will then call you.
Getting a mortgage is a huge financial decision – after all, you’re borrowing money to buy a home, which could well be the most expensive purchase you ever make. And if you fail to keep up with the repayments, you’re at risk of losing that same home. Making time to answer a few questions so you can be sure you get the mortgage you want for the home you want with as little risk as possible to your finances really should be seen as time well spent.
Disclaimer: All information and links are correct at the time of publishing.