After the 2008 financial crisis, the Financial Conduct Authority (FCA) undertook a review of the mortgage market. This resulted in the introduction of affordability criteria, which came into effect in 2014.
Since then, mortgage lenders have been obliged to stop using broad-based criteria such as multiples of income to decide whether or not a potential borrower could afford a mortgage. Instead, they are mandated to look in detail at a person’s specific circumstances.
This means that borrowers should be prepared to be asked for detailed information on their income and outgoings and how these might be expected to change in the future. The bad news is that this can require potential borrowers to put together a lot of paperwork. The good news is that this process can help to reduce the likelihood that people will take on more mortgage than they can really afford.