New mortgage rules could open doors for some. But if you are in debt, read this first.

The financial regulator wants to change the rules around mortgages.

The Financial Conduct Authority, which regulates banks and lenders, is proposing to give mortgage lenders more flexibility to look at people's individual circumstances rather than applying the same rules to everyone.

For some people that could be good news. But if you are on a low income or struggling with debt, it is worth understanding what is actually being proposed before it changes anything for you.

What is actually changing?

Nothing yet. These are proposals, not new rules. The FCA is asking for responses by 28 July 2026, which means any changes are still some way off.

What is being considered includes making it easier for self-employed people and those with irregular incomes to get a mortgage, giving lenders more flexibility around interest-only mortgages, helping older homeowners access money tied up in their property, and allowing lenders to consider someone's current situation rather than automatically turning them down because of past credit problems.

More access to borrowing is not always straightforward

For people who have been turned down for a mortgage because of an irregular income or a difficult credit history, some of this could eventually help.

But it is worth being clear about something. Being offered a mortgage does not mean it is the right time to take one. A mortgage is the biggest financial commitment most people ever make. The monthly payments, the interest, the length of the term. It all adds up, and getting into difficulty with a mortgage is one of the most serious situations you can face.

Some specific things to be careful about

Interest-only mortgages come up in the proposals. The monthly payments are lower, which can make them look appealing. But with an interest-only mortgage you are only paying the interest each month, not the loan itself. At the end of the term you still owe the full amount you borrowed. If you do not have a clear way to pay that back, it can become a serious problem.

Retirement interest-only mortgages, which are aimed at older homeowners who want to release money from their property, work in a similar way. Borrowing against your home later in life can affect what you are able to leave to family. It can also affect whether you qualify for certain means-tested benefits. It is not something to rush into.

Flexible mortgages for people with variable incomes sound helpful. But if your income goes up and down, so does your ability to keep up with payments. Missing mortgage payments puts your home at risk. That is not a situation anyone wants to be in.

What if you have had debt or credit problems in the past?

One of the proposals is that lenders should be able to look at where you are now rather than automatically turning you down because of past credit issues.

If you have worked hard to sort your finances out, that could eventually work in your favour.

But if you are still dealing with debt, or have only recently started getting on top of things, adding a mortgage into the mix is a big step. Just because a lender might be willing to offer you one does not mean the timing is right.

Getting your finances in the best shape first

The strongest place to be when you apply for a mortgage is with your debts under control, your income stable and a clear sense of what you can afford each month, even if things get harder for a while.

That might take time. But going into a mortgage without debt hanging over you makes everything more manageable.