If you need to borrow money for any reason, make sure you deal with an authorised organisation
, in other words one that is regulated by the FSA (Financial Services Authority). The FSA is an independent body set up by the UK government to regulate all providers of financial services in the UK and it is they who: set the standards that must be met; regularly review and assess existing processes and have the power to take action against those organisations which dont comply with regulations.
The FSA has recently announced proposals to change the way mortgages are to be given to customers, which can be summed up as new guidelines which ensure that all lenders are lending responsibly and all borrowers are protected, as far as possible, against spiralling debt with which they cant cope. The theory behind the announcement is that all borrowers should be able to afford their mortgages and the practice is as follows: that all lenders must be ultimately responsible for assessing a potential borrowers ability to pay the mortgage based on mandatory affordability tests; all lenders must ask for proof of income to prevent mortgage fraud and the potential inflation of income and the FSA will put extra protection in place for those customers with a history of poor credit.
These proposals have come about following extensive research carried out by the FSA into the current state of the UK mortgage market, which resulted in a statement from the FSA to say that while the mortgage market undoubtedly worked well for some, more protection was needed for mortgage customers to prevent a repeat of past problems. The FSA spokesperson added that these proposals were particularly important for the protection of the recovering market and they should mean that all potential mortgage customers will know definitively what they can and cant afford to borrow.
The important thing for all borrowers is that they do their research to not only find the best mortgage deals on offer from whole of market mortgage brokers for example but to do so from FSA regulated organisations that will be following these new guidelines. While these guidelines could mean that some people will need to reassess what theyre looking to borrow, what they should mean for most is that theyll be borrowing money and theyll be able to afford the monthly repayments. The other thing to remember is that you can talk to your mortgage broker at any time to discuss your repayments and the mortgage you are on.