MSE News: Urgent warning: EU remortgage rules could create mortgage prisoners

I'm really confused and worried about this. We have an offset, interest only mortgage, currently 75%LTV. We are due to come off our fixed rate and onto an SVR in the summer. We want to stay with our current lender - 1st Direct - there's little choice for an interest only, offset mortgage anyway. But we want to go onto another fix as it'll be a lot cheaper. We have done substantial building work, so after a revaluation, our LTV should now be sub 60% instead of 75%. Our problem is that our monthly household income has drastically reduced (it's now less than a quarter what it was when we got the mortgage two years ago) and we wouldn't pass the old criteria now let alone the new. We are just affording the interest payments from our income at the moment, and obviously over time we have plans to increase our income (e.g. get a second income when little one starts school etc but that's not going to be for another couple of years yet). To get to the point.... Will our current lender (bizarrely) turn us down for a cheaper deal on the basis that the rules say we can't afford it - i.e.mortgage prisoners - even though we're not changing lender? Or worse case, could they invoke some obscure small print rule and recall the loan? Or perhaps force us to change to a more expensive repayment product once they are alerted to our low income? I'm too scared to ask them for advice because of what could possibly happen once they are alerted to our changed situation . Thank you.