Related provisions for MCOB 11.6.14

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MCOB 11.6.1GRP
(1) This section sets out rules and guidance for lenders and providers under regulated mortgage contracts and home purchase plans, in relation to the assessment of affordability for the customer of these contracts. Firms have the option of applying certain of the rules and guidance on a modified basis in relation to regulated mortgage contracts and home purchase plans which are solely for a business purpose or are with high net worth mortgage customers. This section also contains
MCOB 11.6.2RRP
(1) Except as provided in MCOB 11.6.3 R, MCOB 11.6.57 R (Interest roll-up mortgages) and MCOB 11.7 (Transitional arrangements):(a) before entering into, or agreeing to vary, a regulated mortgage contract or home purchase plan, a firm must assess whether the customer (and any guarantor of the customer's obligations under the regulated mortgage contract or home purchase plan) will be able to pay the sums due; and[Note: article 18(1) of the MCD]3(b) the firm must not enter into the
MCOB 11.6.5RRP
When assessing for the purposes of MCOB 11.6.2 R whether a customer will be able to pay the sums due, a firm: (1) must not base its assessment of affordability on the equity in the property which is used as security under the regulated mortgage contract or is subject to the home purchase plan, or take account of an expected increase in property prices;[Note: article 18(3) of the MCD]3(2) must take full account of:(a) the income of the customer, net of income tax and national insurance;
MCOB 11.6.7GRP
A firm may wish to impose a limit, expressed as a multiple of the customer's income, on the amount it is prepared to advance under a regulated mortgage contract or home purchase plan. Such an approach is not, of itself, inconsistent with MCOB 11.6.2 R but, in accordance with the rules in this section, the firm must be able to demonstrate that the loan is affordable, having taken full account of the customer's income and expenditure, and (for a mortgage lender) the impact of future
MCOB 11.6.8RRP
In taking account of the customer's income (in accordance with MCOB 11.6.5R (2)(a)) for the purposes of its assessment of whether the customer will be able to pay the sums due:(1) a firm must obtain evidence of the income declared by the customer for the purposes of the customer's application for the regulated mortgage contract or home purchase plan (or variation). The evidence, whether document-based or derived through the use of automated systems, must be of a type and for a
MCOB 11.6.10RRP
For the purposes of a mortgage lender's or home purchase provider's assessment of whether the customer will be able to pay the sums due:(1) the committed expenditure of a customer in MCOB 11.6.5R (2)(b)(i) is his credit and other contractual commitments which will continue after the regulated mortgage contract or home purchase plan (or variation) is entered into;(2) the basic essential expenditure of a customer's household in MCOB 11.6.5R (2)(b)(ii) comprises expenditure for:
MCOB 11.6.13GRP
(1) Examples of evidence of income in MCOB 11.6.12R (1) are payslips and bank statements.(2) If a firm obtains details of the customer's credit commitments from the customer, it should corroborate the information, for example by making a credit reference agency search or checking credit card or bank statements.(3) Where the customer's credit or contractual commitments are due to end shortly after the regulated mortgage contract or home purchase plan (or variation) has been entered
MCOB 11.6.15GRP
(1) Examples of future changes to income and expenditure in MCOB 11.6.14 R are: reductions in income that may come about following the customer's retirement; where it is known that the customer is being made redundant; or where the firm is aware of another loan commitment that will become due during the term of the regulated mortgage contract or home purchase plan, such as an equity loan to assist in property purchase.(2) If the term of a regulated mortgage contract or home purchase
MCOB 11.6.16RRP
(1) This rule applies where: (a) a purpose of a regulated mortgage contract or home purchase plan (or variation) is debt consolidation; and (b) for a first charge regulated mortgage contract, 4the customer is a credit-impaired customer.(2) Subject to (3), where each of the conditions in (1) is satisfied and, if the debts which are to be repaid using the sums raised by the regulated mortgage contract or home purchase plan (or variation) were not repaid, the transaction would not
MCOB 11.6.20RRP
A firm must put in place, and operate in accordance with, a written policy (which may be contained in more than one document), approved by its governing body, setting out the factors it will take into account in assessing a customer's ability to pay the sums due. The policy must address the following matters:(1) how income and expenditure is to be assessed, including (except as provided in MCOB 11.6.32R (1) and MCOB 11.6.39R (1)): (a) details of the types of income which are acceptable;
MCOB 11.6.60RRP
(1) A firm must make, in paper or electronic form, an adequate record of the steps it takes to comply with the rules in this chapter in relation to each customer.(2) The record in (1) must include the information taken into account in each affordability assessment, so that it is possible to understand from the record the basis of the mortgage lender's or home purchase provider's lending or financing decision, including (except as provided in MCOB 11.6.32R (3) and MCOB 11.6.39R
MCOB 11.5.1GRP
(1) This chapter requires a firm to treat customers fairly by assessing, before deciding to:(a) enter into a regulated mortgage contract or home purchase plan; or(b) vary a regulated mortgage contract or home purchase plan;whether the customer will be able to repay the sums borrowed and interest (in the case of a regulated mortgage contract) or pay the sums due (in the case of a home purchase plan).(2) This chapter aims to ensure that customers are not exploited by firms that