MMR PICTURE

We are investigating adding to our current residential mortgage to possibly fund a house move. This image from the Telegraph is exactly what I looked like last week after a conversation with our bank.

When I booked the phone appointment with one of their mortgage advisors they said they would provide me with a list of documentation they would require before the call.

They duly provided a list via email. As we are both self employed this was an ardous task. I had to scan into their online system 3 years of accounts, tax returns – business and personal, information from the HMRC, 3 months of bank statements and much more.   This probably took 2 to 3 hours to obtain all the information and to upload it all.

We were told the call may take 2 hours!!  The advisor then proceeded to ask us very detailed questions about income, profits etc.  I explained that I had uploaded all the documentation they had asked for.

“Oh” he said.. ” we won’t be looking at that for this call, that’s the next call”

BUT he still asked us the detailed questions that he could have found answers for in all the documentation!  Needless to say my head was in my hands!!

After an hour, he then went on to discuss outgoings.

So you have buy to let properties, can you tell me how much the council tax is on each of those.

I don’t pay the council tax the tenant’s pay that, I answered.

He explained that they had to work from the worst case scenario.  That will show as a big deduction from our profits when they take that into account. Of course I didn’t have that information to hand.  So he had to stop the call and we have had to rebook it for 2 weeks time!!

We asked what other information he would need and he went onto verbally list things like – how much do you spend on contact lenses, gym membership, haircuts etc etc.  I asked if he could email a list to us so we could prepare and he said oh sorry we’re not allowed to do that.   We were not impressed!

It seemed to be particular bad because we are self employed.

In the Telegraph, Martin Lewis, founder at consumer website MoneySavingExpert.com, said:

“It is a farce how self employed people are being handled and it goes against the entrepreneurial spirit of our society. Business owners shouldn’t have to choose between running their business and getting a mortgage.”

The FCA introduced the affordability checks, known as the Mortgage Market Review, in 2014 to ensure borrowers are issued with mortgages they can afford both now and in the future. Since then borrowers have been required to prove details of their income and outgoings by providing bank statements and payslips.

The tests are even more stringent for self-employed people as they face tougher lending criteria than workers employed by a company, as lenders see them as “riskier” borrowers.

I totally understand that the rules have been put in place to ensure that people can actually afford the mortgages they take out, however it’s very unfair that self-employed people are being penalised.

We’d be interested to hear your experiences of getting a mortgage since the MMR has been put in place.  Please email us on info@justdoproperty.co.uk