Affordability assessments slow down applications, borrowers fear

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59% of people who are either considering, or are in the course of applying for a mortgage believe that the obligation placed upon mortgage lenders to assess their ability to repay will slow down the application process, according to latest research from Equifax.

32% of those who have yet to apply also said they would find it fairly difficult to obtain evidence of all the expenditure information they believe a lender needs to assess a mortgage application.

69% who responded to the survey also expressed concern that more detailed affordability checks would affect the amount they could borrow. 40% are also worried about the time it will take to complete their mortgage application.

The responsibilities placed upon lenders, which came into effect in April 2014, as a result of the Mortgage Market Review, place even greater onus on the lender to assess an applicant’s ability to repay. The applicant’s credit history is likely to play a crucial role in that assessment, alongside other information gathered as part of the application process, Equifax said.

Laura Barrett, Equifax consumer affairs spokesperson, said: “It is important to remember that lenders will take into account the information provided on the application form and will look at an applicant’s income and outgoings to ensure they can afford the mortgage they are applying for, now and in the future. However, our research suggests that 22% are still unconvinced that the new affordability rules will help prevent homeowners overstretching themselves in the long term.

“We would recommend compiling any financial documents and expenditure information needed to support a mortgage application, as soon as the application process starts. Advance preparation  will hopefully avoid any unnecessary delays.

“A lender will typically look at an applicant’s credit history when determining whether they meet eligibility criteria and may also use credit information during affordability assessments. Therefore, it is suggested that individuals check their credit report before making any applications to ensure that it is in the best possible shape for them.”

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