Strict mortgage checks encouraging borrowers to ‘play’ the system

24th April 2015


Homebuyers are using more cash and reining in their spending to give themselves a better chance of securing a mortgage, but be wary of trying to ‘play’ the system.


A year on from the implementation of the ‘mortgage market review’, which tightened mortgage lending criteria, borrowers are changing their spending habits in order to qualify for a home loan.


Research by comparison site Moneysupermarket shows 20% of those looking to apply for a mortgage in the next three years are planning to use cash more frequently to hide what they spend their money on from lenders.


Another 21%  said they will pay for more items on their credit card and then pay off the balance each month in order to keep their current account looking healthy.


Cutting down spending is also a priority, with the average potential borrower cutting back £159 on non-essential items so they do not appear frivolous.


Another 29% plan to pay off all debts before applying for a mortgage application.


However, one in 10 had not heard of the mortgage market review and did not know about the new rules.


Kevin Mountford, head of banking at Moneysupermarket, said: ‘Since the new mortgage lending rules came into play a year ago, those looking to remortgage, existing borrowers who are moving home and looking for a better deal and first-time buyers will have been subject to their lender looking more closely – almost forensically – at their monthly outgoings.


‘While the rules were introduced for the right reasons, in some cases borrowers who can easily afford a mortgage are being tuned down for arbitrary reasons.’


He said that  he would not want to see mortgage approvals being given out as easily as they were pre-credit crunch but some people were manipulating their spending to pass the test and ‘may be trying to paint a picture that is far from the reality just to satisfy the requirements’.


‘Paying off debts is always a good way to start when it comes to applying for a mortgage as existing borrowing will be taken into account by a lender when it comes to your application,’ said Mountford.


‘Reducing the amount you spend each month could also help when it comes to the amount a lender thinks you can afford to borrow. But those trying to ‘play’ the system should exercise caution as lenders may still require you to prove where your cash goes. Using a credit cad to hide your spending may also count against you as lenders have access to your credit report, so will be able to see a real0time snapshot of your credit card balance at any time within the month.’


“Paying off debts is always a good way to start when it comes to applying for


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