I’m hearing lots of horror stories about the way banks and building societies are delaying mortgage and loan applications by insisting that applicants jump through endless hoops and over miles of hot coals to satisfy themselves that they are credit worthy and actually have the income that they have declared on the application form.
There is no question that something needed to be done to deal with the mortgage free-for-all that we all lived thought prior to the financial crash of 2008 but it seems to me that lenders have gone too far, and are using new Financial Conduct Authority guidelines to delay applications and to reject perfectly good applicants.
This doesn’t help any of us, and in fact it hinders many since it creates delays and logjams in the housing system as homeowners find it difficult to move up the ladder to a new home, causing problems for the first time buyers buying these houses.
It really is down to lenders to improve their systems so that they are able to accept potential purchasers that meet all of their requirements with the minimum of delays, and it is also up to them to ensure that these requirements are sensible and are not just there as part of a box ticking exercise. I suspect that this is not the case at the moment, and nowhere is that clearer than with certain lenders’ requirements that self-employed borrowers are able to show a range of documentation from HMRC to prove that the figures they have provided are correct. The forms that are being asked for are generally meaningless, and HMRC would admit the same if they were asked I’m sure, and all it does is add delay and stress into a process that is already as time consuming and stressful as it needs to be.
Having said that we, as potential borrowers, can also make sure that we don’t cause any delays from our end by ensuring that we have all of the information that a lender is likely to require to hand and to ensure that we let our employers know that a request for information is likely.