then. The FCA is considering whether lenders should have clearer scope to distinguish between historic credit issues and current financial difficulty.
This could mean that lenders place more weight on your current circumstances, such as your income, outgoings, savings, recent credit behaviour and overall ability to manage the mortgage. Past credit issues would still matter. Lenders would still need to understand what happened and assess the risk. But the approach could become more rounded, particularly where the issue was historic or isolated.
MORE OPTIONS FOR OLDER HOMEOWNERS
The review also looks at borrowing in later life, including retirement interest-only mortgages.
A retirement interest-only mortgage allows you to pay the interest each month, with the loan usually repaid when the property is sold, when you move into long-term care, or when you die.
For some older homeowners, this type of mortgage may help them manage borrowing, stay in their home, or access money tied up in the property. The FCA’s proposals could give lenders more confidence to offer suitable later-life mortgage options. However, borrowing in later life needs careful thought. It can impact means tested benefits, future choices, inheritance plans and the value of your estate. You should always seek regulated advice before considering later-life borrowing.
WHAT COULD THIS MEAN FOR FIRST-TIME BUYERS?
For some first-time buyers, the proposals could make the mortgage process more accessible.
This may be helpful if you have a good income but struggle with affordability calculations, have variable earnings, or have a historic credit issue that does not reflect your current financial position.
If lenders are given more flexibility, they may be able to look at the wider picture rather than deciding based only on standard criteria. That said, affordability will still be central. You will need to show that you can manage your mortgage payments and wider household costs. Lenders will also want to consider what could happen if interest rates rise or your circumstances change.
WHAT COULD THIS MEAN IF YOU ARE SELF-EMPLOYED?
Self-employed borrowers often face a more detailed mortgage process because their income can be harder to assess.
You may have profits that change from year to year, income taken as dividends, money retained in the business, or contracts that do not look like a standard payslip.
The proposed rule changes could encourage a more practical approach to assessing self-employed income. Instead of focusing only on rigid requirements, lenders may have more flexibility to consider the strength and sustainability of your overall financial position. Preparation will still be important. Keep your accounts, tax calculations, bank statements and income evidence organised, and speak to an independent adviser before applying.
WHAT COULD THIS MEAN IF YOU ARE MOVING HOME?
If you are planning to move, the proposals could affect both your own mortgage options and the wider market.
A more flexible lending environment could help some buyers access mortgages, which may increase demand. If you are selling, that could be positive. If you are buying, it may mean more competition for suitable homes.
For your own application, lenders may be able to take a more tailored view of your circumstances, especially if your income, age, credit profile or borrowing needs have changed since you last applied for a mortgage.
WILL MORTGAGES BECOME EASIER TO GET? For some borrowers, they might.
The proposals are designed to help creditworthy people access suitable mortgages where current rules may be creating unnecessary barriers. However, they will not mean that everyone can borrow more easily. Lenders will still need to check affordability. They will still look at income, spending, credit commitments, deposit, property value and the overall risk of the mortgage. The likely direction is more flexibility, not weaker standards.
WHAT HAPPENS NEXT?
The FCA consultation ran until 28 July 2026. After that, the FCA will review the feedback it received and decide whether to move forward with changes.
If new rules are introduced, lenders will then need to decide how to reflect them in their own criteria and application processes. This means the practical impact may take time to appear and could vary between lenders.
For now, the changes remain only as proposals. If you are thinking about buying, remortgaging, moving home, borrowing in later life, or applying with more complex circumstances, speak to a independent mortgage adviser. They can explain the options available.
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For further information please contact Peter Hunt on: 0121 503 0961
www.moneywatchfinance.com
Peter is one of the panel experts for the Grand Designs live TV show and has been recognised in the Times Vouched For guide to the UK’s top rated financial advisers every year since 2019
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