Homebuyers and remortgages will face tougher checks before being granted a mortgage under new rules for lenders that come into force on 26 April.
The changes, which follow the City regulator's mortgage market review (MMR), will see would-be borrowers asked to give more detail about their spending when they apply for a home loan.
Borrowing will be based on how much they have left after regular expenditure, rather than on their income, and lenders will have to check that people can still afford repayments if interest rates rise.
Lloyds Banking Group, which is the country's biggest mortgage lender and offers mortgages through Halifax, Lloyds Bank and Bank of Scotland, said the changes meant interviews with new customers could take around 15 minutes longer, taking the average length up to around two hours.
It said the additional questions would be focused on imminent changes to their lives that can be backed up with evidence. For example, this could relate to someone planning to cut back on their working hours or take out a loan.
The regulator behind the new rules, the Financial Conduct Authority (FCA), said they would "hardwire common sense into the mortgage market", and prevent a return to irresponsible lending that took place in the run-up to the credit crisis.
Some lenders adopted the rules earlier this month, but the changes will mean that anyone who applied for an agreement in principle on a loan several weeks ago, or who has applied for a mortgage and wants to make a material change – perhaps borrowing more – will have to start the application process from scratch.
Some experts have warned that people who would previously have been able to get a mortgage will now be rejected, and that the housing market could slow down while lenders bed in
"MMR represents a seismic shift in mortgage regulations, but also the end product of a gradual process since the recession to focus in on affordability and responsible lending," he said.
"The last 12 months have heralded the welcome return of consumer confidence to the mortgage market. MMR is another important milestone in the continuing recovery and careful handling will ensure that customers are better off for it."
The new rules will not effect mortgages used to fund purchases of rental properties. The FCA has warned that it will keep a close eye on the sector to ensure buy-to-let deals are not used by homebuyers trying to get around the stricter checks.
The FCA's new rules mean:
• Self-certification mortgages are banned – lenders will have to check how much you earn, rather than trusting your word. These have died out since the credit crunch anyway.
• Interest-only mortgages are still allowed, but only where there is a "credible strategy for repaying the capital". This will mean most lenders won't take the sale of the house as repayment vehicle.
• Lenders will stress-test affordability. As well as checking you have enough disposable cash to repay the mortgage at its current interest rate, they will make sure you do at a higher rate – typically around 7%. This will apply to the first five years of the deal.
• Mortgage sales will need to be advised – lenders' staff will have to be qualified and will not just be allowed to sell home loans without assessing customers.