Remortgage and mortgage lending came under new stricter guidelines with the Mortgage Market Review (MMR) which was introduced in late April.  With the MMR in place, borrowers are now forced to prove they can afford the loan they are attempting to secure.  Through release of more intimate details of their spending and saving habits as well as a stress test for determining if rising interest rates will allow the loan to be affordable, lenders are more secure in knowing a borrower can afford a remortgage or mortgage.  The intention of the MMR is to promote responsible borrowing. 

Some lenders are also expected to put in place their own stricter rules for remortgage and mortgage borrowing.  The Royal Bank of Scotland, for instance, recently announced that they will be restricting borrowers on loans of £500,000 or more to a level of no more than four times their income.  Lloyds Banking Group proposed similar guidelines last month.

Homeowners should expect for the remortgage process to be a bit longer and more detailed than the last time they secured a property loan.  Those that are concerned could consider a remortgage broker.  The benefit will be that the broker will be familiar with lenders that have issued their own stricter guidelines, will have worked with a variety of lenders and brokers often have special remortgage deal offers not available directly from a lender to a consumer.

While the MMR changes are going to have an impact on the remortgaging process, the result will be that homeowners will be making a better and more informed deal that should hold up strong against the coming interest rate increases.