Debt charity welcomes increased protection for homebuyers

Consumer Credit Counselling Service (CCCS) welcomes the ban on self-certified mortgages that has been proposed today (July 13) by the Financial Services Authority (FSA).

The national debt charity says the ability to prove you can repay a mortgage is an essential guard against reckless lending. CCCS says the ban will protect people, particularly first time buyers, from purchasing a home they cannot afford.

The FSA is proposing affordability tests for all mortgages and making lenders ultimately responsible for assessing a consumer's ability to pay and requiring verification of borrowers' income in every case to prevent over inflation of income and to prevent mortgage fraud.

There will also be extra protection for vulnerable customers with a credit-impaired history which will include a stricter affordability test and for lenders to apply a ‘buffer' to their calculation of these borrowers' free disposable income.

Malcolm Hurlston, chairman of CCCS comments: "Buying a home, particularly for the first time, is a huge step. It is the biggest financial decision that most people will have to make so it is important that they make the right choices.

"Banning self-certified mortgages, and adding increased protection for those with a history of debt problems, will help inform these decisions and prevent people from being sold a home they cannot afford."