In a video published by Shawbrook TV, Emma Cox, sales director at Shawbrook, explained that from 1st January 2017 the Prudential Regulation Authority (PRA) will require lenders and borrowers to consider affordability positions when taking out an investment mortgage.

More stringent underwriting standards will follow in September 2017.

“The main concern for the PRA is that they don’t want brokers to be in a position where they are creating mortgage prisoners,” Emma stated.

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“So the key concern for a broker should be to ensure that their clients can afford the mortgages that they are taking out in line with the new stress affordability income ratios as applied by the PRA.

“It’s really important that brokers understand that [this] will be implemented as of 1st January 2017.”

However, Emma also insisted that brokers must be aware of more than just the affordability of one mortgage.

“The other thing that brokers should be concerned about is ensuring that their clients will be in a position [where] they can continue to borrow.

“...There is a concern from some lenders [that] if a client is highly geared in a position whereby they can’t afford to pay the mortgage, they may not be in a position [where] they can then continue to lend.

“And that should be a big concern for brokers.”