Relying on banks’ calculators not enough for advisers

Derek Mayne, a former self-employed mortgage adviser and banker and now a compliance consultant and director of Rosewill Consulting, says advisers need to test clients on whether they can afford a mortgage and the repayments.

Mayne says using banks’ UMI calculators is not enough. “Using a UMI calculator just tells an adviser what the client can borrow, it doesn’t take into account the client’s lifestyle and if there will possibly be any changes to it.”

He says when mortgage advisers sign hand-over sheets for the bank to finalise a loan, they are confirming that a client can afford the loan.

Mayne had a situation last year when he was told by an adviser it was wrong to take into account affordability.