Mortgage Rules Might Finally Catch Up With Real Life 

Getting a mortgage could get a bit easier for some people, if new proposals from the Financial Conduct Authority go ahead.1 

The FCA regulates the UK mortgage market and sets the rules lenders have to follow. Its latest Mortgage Rule Review is asking a fair question: is the current system too rigid for people who can genuinely afford a mortgage, but don’t fit the traditional lending box? 

The proposals are aimed at groups who often get a raw deal from standard criteria, first-time buyers, the self-employed, people with variable income, older homeowners, and anyone with a credit issue that’s more history than reality (FCA, 2026). 

Nothing has changed yet. The consultation is open until 28 July 2026, and the FCA will weigh up the responses before deciding whether to bring in new rules. 

Why bother reviewing the rules at all? 

Mortgage rules exist to protect borrowers and keep lending affordable, and lenders have to check people can actually manage their repayments. That’s not going anywhere, and it shouldn’t. 

But the way people earn a living has changed a lot, and the rules haven’t always kept pace. Fewer people have one tidy monthly salary. More are self-employed, on contracts, or earning income that moves around throughout the year. Some want to borrow later in life than lenders traditionally expect. 

The FCA is asking whether lenders should be allowed to assess people as individuals, rather than forcing everyone through the same standard checklist regardless of whether it reflects their actual financial position. 

This isn’t about scrapping affordability checks. It’s about asking whether responsible lending can work better for how people actually live and earn now. 

Who stands to benefit 

If these changes go through, they could help people whose finances don’t fit a neat, standard pattern. 

That includes first-time buyers who can afford the monthly payments but keep tripping up on affordability calculations. Self-employed workers whose income shifts from year to year. Older borrowers looking at later-life lending options. And people whose credit history no longer reflects where they actually are financially. 

How much difference it makes will come down to the final rules, and how individual lenders choose to apply them. Even if the proposals go ahead, this won’t make a mortgage automatically easier for everyone. 

Variable income could get a fairer hearing 

One area under review is how lenders treat income that isn’t fixed. 

If you’re self-employed, a contractor, a freelancer, seasonal, have more than one income stream, or are paid partly in a foreign currency, this matters to you. 

Right now, income that doesn’t look like a standard payslip often gets treated cautiously. Lenders may want several years of evidence, or take a conservative view of anything that moves month to month. 

The proposed changes could give lenders more scope to look at your actual earning and spending pattern, rather than forcing it through a rigid template. That could mean fairer outcomes for people who can afford a mortgage but whose income simply doesn’t arrive the same way every month. 

You’ll still need to provide evidence and show the mortgage is affordable. That part isn’t changing. 

Past credit issues, current circumstances 

A missed payment or a default from years ago can still cause problems on a mortgage application today, even if your finances have completely turned around since. 

The FCA is looking at whether lenders should be better able to separate historic credit issues from current financial difficulty. In practice, that could mean more weight being placed on where you are now, your income, outgoings, savings, recent credit behaviour, rather than something that happened a long time ago. 

Past issues will still matter, and lenders will still want to understand what happened. But there’s scope for a more rounded view, particularly where the problem was isolated or well in the past. 

More room for older homeowners 

The review also covers later-life borrowing, including retirement interest-only mortgages, where you pay the interest monthly and the loan is usually repaid when the property is sold, you move into long-term care, or you die. 

For some older homeowners, this can be a useful way to manage borrowing, stay in their home, or release money tied up in the property. The FCA’s proposals could give lenders more confidence to offer suitable options in this space. 

That said, borrowing later in life needs proper thought. It can affect means tested benefits, future choices, inheritance plans and the value of your estate. Always get regulated advice before going anywhere near later-life borrowing. 

More flexibility on interest-only 

The FCA is also looking at interest-only and part interest-only mortgages, where your monthly payment covers the interest but not the loan itself, meaning you still need a solid plan to repay the capital at the end of the term. 

The proposals could give lenders more flexibility around how they assess interest-only borrowing and repayment strategies. That could help some borrowers where a repayment mortgage isn’t the right fit. 

But the risk is real. If your repayment plan doesn’t work out, you may need to sell the property or find another way to clear the loan. Speak to an adviser before going down this route. 

What it could mean for first-time buyers 

For some first-time buyers, this could make the process more accessible, particularly if you’ve got a decent income but keep getting caught out by affordability calculations, variable earnings, or a historic credit issue that doesn’t reflect where you are now. 

More flexibility for lenders could mean a wider view of your situation rather than a decision based purely on standard criteria. Affordability still sits at the centre of it though. You’ll need to show you can manage the mortgage and your wider household costs, including what happens if interest rates rise or your circumstances change. 

Talking to an adviser early is still the best way to understand what you could borrow and how to strengthen your position. 

What it could mean if you’re self-employed 

Self-employed borrowers usually face a more detailed process because their income is harder to assess neatly. Profits that move year to year, dividends, money kept in the business, contracts that don’t look like a standard payslip. 

The proposed changes could push lenders towards a more practical approach, focused on the strength and sustainability of your overall financial position rather than a rigid checklist. Over time, that could mean more choice for self-employed borrowers. 

Preparation still matters. Keep your accounts, tax calculations, bank statements and income evidence in order, and speak to an adviser before you apply. 

What it could mean if you’re moving home 

If you’re planning a move, this could affect both your own options and the wider market. More flexible lending could bring more buyers into the market, which is good news if you’re selling, and means more competition if you’re buying. 

For your own application, lenders may be able to take a more tailored view, especially if your income, age, credit profile or borrowing needs have shifted since you last applied. Worth checking what you could realistically borrow before you start making plans. 

Will it actually be easier to get a mortgage? 

For some people, yes. The proposals are designed to help creditworthy people get suitable mortgages where current rules are creating unnecessary roadblocks. It won’tmean easier borrowing across the board. 

Lenders will still check affordability. They’ll still look at income, spending, credit commitments, deposit, property value and overall risk. This is about more flexibility, not lower standards, and that distinction matters. 

What happens next 

The consultation runs until 28 July 2026. After that, the FCA reviews the feedback and decides whether to press ahead. If new rules do come in, lenders then need to work out how to apply them in their own criteria, so the real world impact could take a while to show up, and it may differ between lenders. 

For now, this is all still proposals, not policy. 

If you’re thinking about buying, remortgaging, moving home, borrowing later in life, or you’ve got circumstances that don’t fit the standard mould, talk to us. We’ll give you a straight answer on where you stand and because we have access to a comprehensive panel of lenders we can help you find the most suitable mortgage product for your needs.   

Important Disclaimers 

We do not charge a fee for mortgage advice. Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it. 

The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics, and images, does not, and is not intended to, substitute professional financial advice; instead, all information, content, and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information. 

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References 

Financial Conduct Authority (2026). CP26/18: Mortgage rule review, supporting first-time buyers and underserved consumers. Available at: https://www.fca.org.uk/publications/consultation-papers/cp26-18-mortgage-rule-review-responsible-lending (Accessed 23 June 2026).