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Affordability: ‘A mortgage is as good as its strongest link’ – Star Letter 26/07/2019

  • 26/07/2019
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Affordability: ‘A mortgage is as good as its strongest link’ – Star Letter 26/07/2019
Each week Mortgage Solutions and its sister publication Specialist Lending Solutions choose the best reader comments in our Star Letters column.


This week’s top comment goes to Lanky Des for his response to the article: It’s right to flex criteria for mortgage prisoners, but what about the rest? – Bamford.


He said: “The current situation, where nobody will ignore their affordability calculation for one pound is absolutely ludicrous.

“Affordability calculations have their place. I had mine many years before most lenders and very robust it has proved to be. However, they are not the be all and end all.

“I have recently had a case where one of the parties was employed and the other was a student who will graduate next year. She has a good work record, and her maintenance grant plus savings (which will still be left after the purchase) is enough to get her through next year without her being regarded as a dependent. She is no bigger risk than someone who could lose a job.

“I’ve done several such borrowings with students involved in the past and none of them have had any problem. I always look at every case as though I was the first line underwriter for the lender. If I don’t like the case it is not going to get any further.

“However, while he passes affordability on his own, they miss by miles with her included with just about every lender other than Kent Reliance. There is absolutely no sense in this at all.

“The mortgage is as good as its strongest link, not its weakest. You cannot weaken a mortgage by adding the liability of someone who is going to live in the house. It isn’t like adding a party to a bank account in the days when you gave them a cheque card and chequebook; then they could weaken the bank account.

“Now, if they are that sort of person, they would still weaken the lending by being in the household; it is just that the lender would not have their liability on it. It’s worse for everyone.

“Unfortunately, the regulator does not understand the industry and this would be over its head. It apparently does not object however to adding parents to a mortgage for the income.

“That can increase strain on real affordability as the parents’ age may dictate a shorter term than is really affordable. I will only do that where I am confident the parents will never be called upon and I am confident the couple will be fine.

“In that sense, my lendings are actually stronger than the regulator says they need to be.

“The young person or people should not be put in the position where the lender will lend merely because they can fall back on the parents.”


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