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Countdown to new UK lending laws

New rules from the UK’s Financial Conduct Authority (FCA) will come into force on 26 April 2014, designed to ensure a “common sense approach” is taken for every lending decision.

To ensure that people only get a mortgage they can afford - and to prevent a recurrence of the irresponsible lending practices of the past - every borrower will now have to prove that they can afford the repayments, both now and in the future.

The FCA has produced a short guide that explains the changes. 

About half a million copies will be given out to prospective borrowers in branches of high street lenders, mortgage advisers and estate agents.

“In the past, too many people got a mortgage by simply telling their lender they would have no problem repaying their debt, and that was that,” FCA chief executive Martin Wheatley said.

Getting a mortgage can be one of the biggest financial decisions people will ever make, so it needs careful consideration,” Mr Wheatley said.

“Our new rules will hard-wire common sense into mortgage lending, and the guide we have created will help explain those changes to borrowers.”

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The UK mortgage industry has been preparing for the changes for about 18 months and many firms are using the new approach already, the FCA noted.

 

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