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Tougher rules on mortgages

Tougher mortgage rules to make sure borrowers can only take out deals they can afford have been outlined by the financial services regulator. The shake-up, which comes into force in April 2014, is the result of a long-running review by the FSA.

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Mortgage overhaul to slash loans to over-50s

People in their 50s could struggle to get a mortgage under the new rules Credit: Danny Lawson/PA Archive

New regulations will also include a crackdown on interest-only mortgages, a favourite of first-time buyers as they only require payment of interest on the loan, not the actual loan sum itself.

But lenders will now have to demand that homeowners with interest-only mortgages build separate savings to pay off the loan itself, the Council of Mortgage Lenders said.

Checks will also be made during the term of the mortgage to make sure the savings fund is still in place.

The raft of restrictions are set to be placed on mortgage loans due to a clampdown by the FSA on irresponsible lending, to make sure borrowers can only take out deals they can afford.

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