Want a mortgage? You'll have to pass this exam!

I'm in favour of the proposal. Mortgages are important and complex, and buying a house is one of the biggest decisions that most people make. First-time buyers should understand what they're getting into before they sign on the bottom line. The personal consequences of defaulting on a mortgage are potentially terrible: stress, illness, marriage breakdown, repossession, heavy drinking or drug-abuse, and the temptation to commit property crime. To see the consequences for society as a whole, just look at the whole sub-prime crisis we've seen over the last few years. Christina wonders whether there should be an exemption for people "with rich parents who could bail them out if things got hairy". I say there shouldn't. People with rich parents will be happier if they learn to manage money, just like the rest of us. The parents will be happier and family relationships will be stronger, too. Christina also asks: "What about the fact that most borrowers who fall into arrears do so because of an unforeseen life-changing experience ...?" That should be covered in the counselling. Building up a contingency fund or buying good-value insurance to protect against unmanageable risks is part of good money-management. Not everyone does it. Everyone should. Finally: "buyers .... can go to an independent qualified mortgage broker who will advise them on the best course of action." Well, no. First, the broker is too busy. Second, he has powerful incentives to sell as many mortgages as possible, rather than to sell the most appropriate mortgages and turn away customers who can't afford them. Third, a typical first-time buyer already struggles to absorb and remember everything that's said in a mortgage consultation; if you added advice on money-management, it would be overwhelming. The counselling I'd like to see would be light on financial jargon. Sure, it would have to explain the difference between the most common products and variations on the market. But that could be done at a very simple level -- for example: if you choose an interest-only mortgage, you must find some other way to pay for the house (such asn an endowment) at the end of the term, and you take the risk that the investment will fall short and you'll be repossessed. If you take a mortgage with a low rate in the early years, you'll pay for it later on, either by paying off the capital more slowly or in high exit fees. If you take out a mortgage when interest rates are low, you must work out whether you can afford the payments when rates rise. And so on. Borrowers should be taught how to make a budget. Some people need to be told that lliving off credit is expensive: that they'll have more goodies if they save up for things, rather than borrowing for them. And we've already mentioned the need for savings and insurance to protect against the unexpected. You can't expect a mortgage broker to explain all this. You can't expect buyers to learn it from a Web site (no matter how good!) while they're going through the stress of buying their first house. And people don't seem to be learning it from their family and friends. So I say some counselling and an exam would be a force for good. They might just start to unwind this country's reckless addiction to debt.

The money markets who lent and the home owners who were happy to take out additional loans based on the inflated equity value of their property are all culpable for the housing gridlock. It's all been said before, but the abandonment of responsible lending and borrowing based on real ability to repay in bad times as well as in good has played its part. 3 x one income. 2 and a half x joint worked. It kept house prices affordable at all levels of the market. I hope first time buyers revolt and refuse to buy into the market. Just because someone tells you a house is worth X, doesn't mean it is...unless you buy it at that price.

As someone with a perfect payment history, credit reference, good salary, remortgaging to raise £48K to give a max of £97K on a £200K plus house, with investment, endowment, pension etc with the woolwich, beleive me first time buyers will need more than an exam!!!. The housing market will never move until the banks wake up and start lending - I'm just waiting now to be asked to donate a pint of blood, which is all that hasn't be asked for so far to support the application. Absolute overkill isn't the half of it - if only theyt'd been so damn careful with all our money which they were happy to gamble with which caused the financial crash, which has affected so many. Whoever wins the election sorting these bankers out should be an early priority!