Lenders have their work cut out for them now due to the new rules which govern the lending process.  The main new rule is going to put potential buyers through a rigorous approval process.  The process of obtaining a new loan or remortgage will include a confirmation process to understand how the borrower will pay back the loan over the time allotted.  This is being referred to by many as the strategy of paying back the loan.

Changes are also taking place in the types of mortgage loans buyers are obtaining.  Interest-only mortgages are not as popular as they once were according to the Financial Conduct Authority or FCA.

Remortgages will be governed by a different set of rules.  Lenders will have the authority to allow borrowers to go without a credible strategy for repayment in mind.  This set of rules is known as transitional rules.

According to mortgage broker John Charcol’s Ray Boulger, lenders are in disagreement with many rules stated by the FCA and dispelling them as illogical.

Customers could view this as an inconsistent way to deal with them and even further the FCA will no longer allow lenders to use cash savings, premium bonds or cash Isas to pay off the remaining balance of a mortgage.  The same set of rules could also apply to buy to let property.

Lenders will have several potential obstacles to overcoming the rules set in motion by the FCA and that could be quite challenging for many lenders.  Borrowers will also have to adjust their approach to doing business with lenders in the future.