Swopping mortgage rate - keeping lender

amnblog

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.

Thrugelmir

There's much historical poor lending that exists. So reasonable to expect certain lenders to be undertaking thorough reviews of existing mortgage books.

amnblog

With what intention if they find a 'hole' with a particular case Thrugelmir?

Leon_W

They can't unlend the money. What's done is done. If the debt is being serviced then what's the problem ?

amnblog

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.

Leon_W

It's quite clear from the FCA link you posted amnblog that lenders have gone totally over the top with this !

amnblog

Bitten by the guard dog.

kingstreet

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.

TrickyDicky101

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

TrickyDicky101 wrote: »

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.

Yorkie1

What are contingency premium rates?