New mortgage rules and you


A mortgage is usually the biggest debt that people face during their lives. Now the rules governing who can secure a home loan are tightening.

The new system, which comes into force fully on 26 April, ensures that lenders conduct a full affordability check on mortgage applicants.

This will have practical implications for the amount people can borrow and the length of time that an application might take.

The aim is to prevent any return of the pre-crisis mortgage lending that many described as "reckless".

Remind me what the problem was?

Before the financial crisis, the housing market was booming, sales were frequent, and lenders were keen to advance individuals a mortgage.

In some well-documented cases, potential buyers were able to borrow the full price of a home, and a loan on top, then initially just pay back the interest.

But, when property prices fell, many found themselves in negative equity. Many who lost their jobs or had hours reduced also found they had overextended themselves when borrowing for a mortgage and struggled to make repayments.

The City regulator, the Financial Conduct Authority (FCA), is introducing new regulations to ensure the most extreme cases are not repeated.

"In the past too many people got a mortgage by simply telling their lender they would have no problem repaying their debt, and that was that," said Martin Wheatley, chief executive of the FCA.

"Our new rules will hardwire common sense into mortgage lending."