THERE have been multiple cases of people facing mortgage penalties and higher interest rates as banks use the current Mortgage Market Review rules to “weed out” borrowers on cheap deals, a national newspaper found
THERE have been multiple cases of people facing mortgage penalties and higher interest rates as banks use the current Mortgage Market Review (MMR) rules to “weed out” borrowers on cheap deals, a national newspaper found.
The Telegraph found that some home movers were wrongly being put through “affordability” tests, in which one wrong answer can lead to rejection, leading to borrowers being forced to cancel their existing mortgages and paying as much as £15,000 in exit fees.
Experts have said that borrowers whose situations have changed since they took out their current mortgage and the over–50s are the most at risk of being targeted by the tests.
The Mortgage Market Review reforms were introduced to ensure a continued access to mortgages for the great majority of customers who can afford it while preventing a return to poor practices seen in the past.
However, borrowers who are moving home or remortgaging without borrowing additional money are supposed to be able to do so without undergoing another MMR affordability check.
A spokesman for the Financial Conduct Authority said some lenders were "not applying the [MMR] rules correctly.”
The Telegraph uncovered many cases where banks were forcing existing borrowers to meet the new criteria.
Standard Property says, if you’re about to remortgage or move house, make sure you do your homework first.