Buyer’s Aid rules tighten as couples are forced to apply jointly
Mortgage advisers report that first-time buyers face stricter rules under the new home buying assistance program that prevent a married or cohabiting couple from applying for a mortgage under one name because the other partner has credit problems.
Unlike the outgoing program, Buying Assistance agents do not allow married or cohabiting couples to apply under one name if it would facilitate the application. The only exception to this rule, according to comments received by brokers, is when the request is made in one name for “religious or religious reasons”.
Under the rules of the old regime, although couples were supposed to apply in common name, if either partner had a problem with their credit report, they were allowed not to take out the loan. Partners were also allowed to opt out of the application if their age or other personal circumstances made the mortgage more expensive or unsustainable.
Although the new program reserved for first-time buyers has only been open for bookings since December 16, the change in rules has already led to the refusal of first-time buyers who could afford the mortgage on the basis of an applicant’s income. .
Mortgage Solutions asked Homes England why the policy, set by the Department for Housing and Local Government, had been tightened, but refused to acknowledge that creditworthiness was no longer accepted as a reason for not borrowing the loan and said describes the broker’s claims of rejected cases as “inaccurate”.
Matt Coulson, director of Heron Financial, said his company had already had three cases that could not be processed because that exception was removed.
“No longer allowing married borrowers to apply under one name because the applicant has credit problems is a key change from our perspective,” he said. “It has already had an effect, and some applicants have not been able to proceed.
“It is a very common scenario to have one applicant with an A-rated credit report who can support the mortgage on his own and the other with credit problems, particularly in the past 12 months where the pandemic has taken hold. put pressure on personal finances.
“We recently called to speak to various Buying Assistance agents to dispute the situation and each time we were told that under no other circumstance, except for religious or religious reasons, a joint application cannot. be avoided. They keep referring us to rules that don’t allow solvency as an exception.
“Many of the changes in how the Purchase Aid works were viewed positively and meant that the program is more useful for those who need it most, such as the introduction of regional price caps and the limitation of use to first-time buyers. But this change in niche policy does not seem to be in line with the spirit of the program and, as a result, first-time buyers are unduly penalized. “
Another brokerage firm, who declined to be named, told Mortgage Solutions that it recently saw a case rejected under the same circumstances.
Matt Poole, director of Poole Family Financial, said it had always been difficult to get a bank to offer a mortgage to half a couple because the other had already had credit problems, but this option should always be available to borrowers.
“Each claim should be assessed on its own merits,” said Poole. “Credit issues could arise from a previous marriage or relationship and, while still on the credit report, no longer reflect current circumstances. Home Buyers and Mortgage Lenders need to use common sense and understand the story. There should be flexibility in the rules.
A spokesperson for the department said: “The new Help to Buy: Equity Loan (2021-2023) is helping those who need it most, first-time buyers. As an entirely new program, it is subject to completely new terms and conditions.
“Given that the first-time buyer is only eligible for the new regime, it is reasonable that couples are expected to submit a joint application, whether they are married or cohabiting.
“In exceptional circumstances where the prime lender, for example, is only lending to one person, we will review approvals on a case-by-case basis provided that both parties sign the declaration that they are a first-time buyer.”
But when asked if Mortgage Solutions was an exceptional circumstance that would be considered on a case-by-case basis, Homes England declined to comment.
It is understood that Homes England is developing additional guidelines to assist brokers and clients.