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Affordability calculations could avert self-cert crisis

Affordability calculations are key to solving the self-cert crisis identified by the recent FSA mystery shopping exercises according to residential lender Mortgages plc.

Mortgages plcs comments follow the findings of an FSA mystery-shopping exercise in which 47 per cent of the 249 reviewed failed to demonstrate that affordability had been appropriately assessed by intermediaries.

Sales and marketing director Peter Beaumont warns that if bad practices continue to be unearthed, self-certification is in danger of disappearing altogether. Mortgages plc is currently piloting its online system due to be launched in early 2006. This will provide brokers with access to products using an affordability calculator or traditional income multiples.

He says: If gross income is the problem, affordability calculators are a potential solution. Borrowers who are unencumbered by large amounts of debts and who have modest living expenses, can usually borrow significantly more using an affordability calculation than traditional income multiples would permit. There is no need for intermediaries to fudge income figures and put their future livelihoods at risk.


Pack to the future

Our panel assess the likely impact of home information packs on distribution and discuss whether a study to find one-off cost of regulation would be helpful to the industry.

ProVen Growth and Income VCT launches “C” share offer

ProVen growth and income VCT manager Beringea is aiming to raise 25m through a “C” share offer. The VCT aims to return at least 25p per 1 invested within 3.5 years of the offer closing, through a combination of tax-free dividends and a tender offer. This is intended to reduce the net cost of each […]

Ritchie warns of pitfalls in Turner plans

Pension guru Stewart Ritchie is outlining his plan for UK pension reform and warning IFAs of potential pitfalls in the Turner report. In his Ritchie Report, the Scottish Equitable pensions development director sets out his six-point plan for reform. He warns that the consequences of possible Turner proposals could include UK plc becoming less competitive […]

Letting agents exaggerate rental returns by up to 25 per cent

Letting agents in some regions of the UK are overstating rental returns by up to 25 per cent according to buy to let broker Landlord Mortgages.The broker advises prospective landlords to thoroughly research properties before making any purchasing decisions.London agents inflated rental returns by up to 25 percent followed by Birmingham agents who increased rental […]


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