CHAPTER 4: AFFORDABILITY PLATFORMS

The Financial Conduct Authority (FCA) states that mortgage lenders must make sure borrowers take out a mortgage they can afford. Whether getting a new mortgage, increasing a current mortgage or remortgaging with a different lender, the lender must check that the borrower can afford the repayments now and in the future.

Affordability systems highlight the different approaches to affordability that lenders take. Lenders often have complex methods of calculating how much they are willing to lend to a particular borrower.

Lender X may lend more than lender Y on a residential case but less on a buy-to-let, for example. Affordability systems aim to provide mortgage advisers with the tools to answer the perennial question from clients: “how much will I be able to borrow?”

MCOB 11.6 on responsible lending and financing states:

The firm must not enter into the transaction… unless it can demonstrate that the new or varied regulated mortgage contract or home purchase plan is affordable for the customer (and any guarantor).

4.01 ADVISER RESEARCH

Advisers were given more options for answers to this question for this edition of the report, but what is clear is that a year on they see affordability calculations to be more important that before.

61% think lender affordability comparisons are either extremely or very important.

Figure 4.01: How important is the ability to compare lender affordability calculations?

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Similarly, the majority of brokers (58%) believe that being able to calculate affordability from within a sourcing system is either extremely or very important.

Figure 4.02: How important is it to compare lender affordability calculations within a sourcing system?

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This data was collated in January 2021. Trek Publishing Limited accepts no liability for loss or damage to material submitted for publication.
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