Affordability calculation reduces self-cert business

Amanda Jarvis

April 12, 2006

This is now available to the whole of market via the lenders online On Demand system.

The affordability calculator assesses borrowers borrowing capacity based on their net disposable income rather than gross income as used by traditional income multiples. Borrowers who do not have large amounts of debt and who have modest living expenses can usually borrow significantly more (up to 5 times income) than they would be able to using traditional income multiples. The calculator was piloted in 2005 and launched as an integrated part of the lender’s new On Demand online mortgage system in January 2006.

Pete Thomson, sales director, said: “Our affordability calculation is one of the most popular features on our new On Demand system and feedback from intermediaries has been excellent. Although the overall number of mortgage applications we are receiving has grown significantly in recent months, we have seen a marked fall in the proportion of self-cert applications since we launched affordability based underwriting.”

“During a series of intermediary workshops held in recent weeks, introducers have been telling us they have become increasingly wary of self-cert and that they are looking for ways to avoid it if at all possible.”

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