Consumers having no idea about loan availability

Before the banking crisis, a UK consumer did not have to worry about the amount of money they were able to obtain on a home owner loan or mortgage because lending standards were so loose that one could borrow large income multiples on loans.

When the recession hit the UK, loan providers were forced to make their lending criteria stricter so that getting the necessary loan amount became a matter of great concern to a potential borrower.

However, a recent study from Unbiased.co.uk demonstrates that UK consumers are exhibiting pessimistic attitude when they need to apply for a new home owner loan.

The survey has shown that many UK consumers didn’t know how much they would be able to get on a secured loan or home owner loan. About the fifth of respondents only thought they would be able to obtain a loan ranging between half and two and a half times their annual income.

Moreover, nearly 40% responded that they thought that a maximum loan to value which can be obtained is about 80% or even less.

Karen Barrett of Unbiased.co.uk explained that in fact loan providers are now making their lending criteria more relaxed, offering about four times and more a borrower’s income. In addition, borrowers are not required to put down such a large deposit to get an affordable mortgage now.

A growing number of lenders are ready to provide consumers with 90% loan to value, which means that even first time buyers who earlier found it difficult to enter the market can now check whether they can get an affordable mortgage deal.
 


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