We have been taking a closer look at the FSA regulation being considered to reduce the risks in providing mortgages that may subsequently fall into arrears and have found a detailed list put forward as guidelines for lenders.
Expenditure is determined for the mortgage applicant and their dependants using 3 areas of assessment; committed expenditure, personal expenditure, and contingency expenditure. Below is the detailed list of areas to be assessed.
Committed expenditure
Income tax and NI
Servicing of existing secured and unsecured debt
Utility bills and other household bills
Council tax
Service charges or land rent
Shared ownership rent
Cost of investment vehicle to repay interest-only loan
Insurance premiums
Pension contributions
Nursery/college/school/university fees
Alimony and maintenance payments
TV license and communication
Regular savings
Other existing commitment
Personal expenditure
Food and drinks
Alcohol and tobacco
Clothing and footwear
Household goods and services
Health and personal care
Transport
Recreation, culture, restaurants and hotels
Holidays
Other miscellaneous goods and services
Contingency expenditure
Prudent allowance for any missed or understated
expenses
