Interest only mortgage and out of fixed term

shomk

We have an interest only mortgage which has been out of its fixed term for some time. We have left it like that as the rates have been low and we have not been in a position to remortgage. So I have a few questions.

Background: Since taking out this mortgage we have not paid anything off and we have some some financial issues, with other debt and only one income, so I really don't want the bank asking questions about our income/credit checks.
I will gain some money in the next few years (from the sale of a family business that I am involved in) to pay at least a large chunk. I would like to make overpayments in the meantime.

1.  With rates going up I need to fix. Is the bank obliged to move me to a fixed deal without checks, to improve my financial position? I don't want to be in a position whereby I find myself hiding the truth (that would be fraudulent). We can and do afford our payments each month, but I am aware of how the banks have tightened things.
2.  They keep asking me how I will pay back the mortgage. I have not replied to this. How does this questioning go? I don't have exact answers, as in dates and amounts. I understand the need for this questioning, but don't want to say anything that is going to go against me.

Thanks All.

Snookie12cat

The bank is not obliged to do anything but they tend to do product switches with no checks providing your payments have been okay.

They are asking you how you plan to repay the interest only mortgage because they must do this now to ensure you have strategy in place. Be careful though as not all banks accept all methods as a repayment strategy and almost none I have looked into allow future, non guaranteed lump sums. 
Some accept downsizing, pension etc. It might not be a problem as you are already on the product, but if you try and move to a new one, you might find you no longer qualify for interest only with that lender. 

MWT

shomk said:

1.  With rates going up I need to fix. Is the bank obliged to move me to a fixed deal without checks, to improve my financial position? I don't want to be in a position whereby I find myself hiding the truth (that would be fraudulent). We can and do afford our payments each month, but I am aware of how the banks have tightened things.

Assuming your mortgage is still with an active lender, have you looked to see if they have any other products available for you to select? (assuming you have an online account)

If there is a product shown for you to select there are not normally further financial checks, but a lot with older interest only mortgages are finding themselves with inactive lenders, and no new fixed products available.

shomk said:

2.  They keep asking me how I will pay back the mortgage. I have not replied to this. How does this questioning go? I don't have exact answers, as in dates and amounts. I understand the need for this questioning, but don't want to say anything that is going to go against me.

They have to ask as they are under a duty of care to both remind you of your obligation to repay at the end of the mortgage term, and to determine if your repayment vehicle is credible.

They won't kick you off the mortgage given that it likely wasn't a requirement when you first took it, but lack of a credible plan would stop them being able to move you to a new mortgage (as would failing the affordability test), if for example you wanted to change the term or the loan amount.

Who is your lender and how long is left on the term?

Sistergold

A bird in hand is better than two in the bush. You have mentioned selling off family business to pay off a chunk. The bird in hand is “starting to overpay now” the two birds in the bush “is the unknown chunk of money to be obtained by sale of business”. 

The bank is asking how you will pay it off as truly it’s not ideal to be on interest only with no solid plan. If downsizing is possible then that again is a solid plan. 

Check if you can switch products with same bank as others have mentioned as this does not trigger affordability checks.