Swopping mortgage rate - keeping lender

Swopping to a new rate with your current lender is a 'Transitional Arrangement' under FCA rules.

A lot of posters on here are asking if they will have to prove income is sufficient to take a new mortgage rate. Many brokers have confirmed that there are lenders that intend to ask for proof of income to swop a product in some cases.

The rules say the regulator suggests the lender should

only require an affordability check where there is additional borrowing, or a material impact on affordability;

then then go on to say

we are allowing lenders to make their own assessment about making exceptions to the affordability and interest-only rules.

I read this to mean that lenders have room to allow previous arrangements to continue without reassessment.

It appears lenders may be using this clause to suit there own aims.

Full details start on page 16 here

http://www.fca.org.uk/static/documents/policy-statements/fsa-ps12-16.pdf

The message seems to be, be careful when dealing with your current lender and don't assume a product rate swop will go through without a hitch.

If in doubt, consult a broker.
I am a Mortgage Broker

You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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Comments

  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    There's much historical poor lending that exists. So reasonable to expect certain lenders to be undertaking thorough reviews of existing mortgage books.
  • amnblog
    amnblog Posts: 12,699 Forumite
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    With what intention if they find a 'hole' with a particular case Thrugelmir?
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Leon_W
    Leon_W Posts: 1,813 Forumite
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    They can't unlend the money. What's done is done. If the debt is being serviced then what's the problem ?
  • amnblog
    amnblog Posts: 12,699 Forumite
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    Leon_W wrote: »
    They can't unlend the money. What's done is done. If the debt is being serviced then what's the problem ?

    Expect to see lenders start to factor in a contingency rate as a premium on the deal if affordability or LTV is not maintained.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Leon_W
    Leon_W Posts: 1,813 Forumite
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    It's quite clear from the FCA link you posted amnblog that lenders have gone totally over the top with this !
  • amnblog
    amnblog Posts: 12,699 Forumite
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    Bitten by the guard dog.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • kingstreet
    kingstreet Posts: 39,232 Forumite
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    I wonder what happened to this;-
    So, for example, an affordability assessment will not be required for a change that does not have a material impact on affordability, such as a rate switch or retention deal; or where the borrower is porting their mortgage or moving to a new property (with no increase in the current amount outstanding).

    3.10

    http://www.fca.org.uk/static/documents/policy-statements/fsa-ps12-16.pdf

    Exactly the point I was referring to earlier.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • TrickyDicky101
    TrickyDicky101 Posts: 3,529 Forumite
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    It leads to the perverse situation where the borrower is rejected on affordability grounds despite the fact their monthly repayments would actually decrease should they port (and taking into account there is an existing mortgage with the same lender already).

    I agree with amnblog's post #5 that contingency premium rates could be a logical result included in new mortgage contracts.
  • amnblog
    amnblog Posts: 12,699 Forumite
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    I agree with amnblog's post #5 that contingency premium rates could be a logical result included in new mortgage contracts.

    Another move that the great British public will swallow like they do every money making scheme the Banks think of.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Yorkie1
    Yorkie1 Posts: 11,973 Forumite
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    What are contingency premium rates?
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