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New factors involved in UK mortgage decisions

Date: Tue, 18 Oct 2005

The affordability factor is set to play a key role in how the UK mortgage market will determine lending amounts.

At present the size of a mortgage is based solely on salary, however, research conducted by the Centre for Economics and Business Research, on behalf of Alliance & Leicester, suggests that this could be about to change.

Using affordability systems would mean that lenders would examine levels of disposable income and personal circumstances, rather than simply gross salary as a way of establishing how much to loan to customers.

It is hoped that the new system will enable those without children and single buyers to establish themselves on the property ladder.

"Affordability provides a more responsible approach to lending as it considers an applicant’s individual circumstances – those who are debt free will benefit the most," said Stephen Leonard, director of mortgages at Alliance & Leicester.

"Lenders have responded to changing circumstances. The move towards affordability based lending means that more people will get a helping hand onto the property ladder – and homeowners will continue to be able to ‘move up’ as their incomes rise," he added.


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