I would say these days, or any days in the past, there should be / have been no chance of borrowing beyond capacity to repay. Thats why I ask " Should there be a document called "The declaration of affordability" among the documents that a bank requires when it is assessing someone for a mortgage "?Why?
With lending so tight these days, what are the chances of borrowing beyond capacity to repay?
Every loan offer should have set out the above but unfortunately not all of them did. That is another matter though, and not the query here.Every letter of loan offer sets out the amount of the mortgage, the amount that will actually be repaid over the term, the amount of the monthly repayment, at current interest rates, and the monthly repayment if that interest rate goes up.
No there wasn't! Standard expectation of loan assessment is and was that all banks would apply a stress repayment test on all loan facilities before approval. It is clear from the banking crisis that these tests were not applied in a significant number of cases.To get back to my question maybe I should rephrase it. During the boom years, was there ever a document called "The declaration of affordability" among the documents that a bank should have completed when it is assessing someone for a mortgage?
I mean was there a requirement on the bank to check if the borrower could repay the mortgage repayments (with the existing interest rates at the time, say, and with the not unreasonable assumption they would stay more or less the same) and a document to sign (or box to tick) once they have checked that?