How are mortgage companies allowed to simply increase your mortgage payments?

mikeb222

So I'm forever hearing about how difficult it is to get a new mortgage or even a remortgage these days because of the "affordability checks" by the mortgage companies. And it's probably a good idea to have increased the checks. So it makes my blood boil when the same companies simply send me a letter every month stating "your mortgage payments have increased by another £50 or whatever". So how is this even possible? What if this makes my new mortgage payments unaffordable? I don't think they should be allowed to increase your mortgage payments above the "affordable" limit. The greed shown by these companies is unbelievable and people aren't doing anything to stop them, other than moaning. I'm starting a campaign to stop the mortgage companies hypocracy.

The_Unready

You may want to read up on the concept of interest rates to answer the question 'how is this possible '.

jackieblack

https://www.halifax.co.uk/mortgages/help-and-advice/how-does-a-mortgage-work.html

(Other lenders = broadly similar...)

aoleks

you're on a tracker/variable tariff, hence they're allowed to. it costs banks money to borrow, that cost is passed on to you.

cymruchris

If you want your payments to stay the same - you need to sign yourself up to a fixed rate deal. Currently these are likely to be more expensive - but give you the protection against further rises.

dunstonh

So it makes my blood boil when the same companies simply send me a letter every month stating "your mortgage payments have increased by another £50 or whatever". So how is this even possible?

Affordability checks are done at the point advice is being given or a new product is being purchased.  They are not required with rate changes as that is behaving within the terms of the contract agreed.

What if this makes my new mortgage payments unaffordable?

Irrelevant.   You agreed to it when you chose and purchased the product.

I don't think they should be allowed to increase your mortgage payments above the "affordable" limit.

I am not sure on what planet that would be a good idea in respect of variable rate products.  However, if you feel that way, why
didn't you purchase a fixed rate product?  Or the exact product that does exist called a capped mortgage?

The greed shown by these companies is unbelievable and people aren't doing anything to stop them, other than moaning. I'm starting a campaign to stop the mortgage companies hypocracy.

There is a lot of irony in that sentence and the reality is that you are the hypocrite.   You bought a variable rate mortgage and have had exactly what you chose.     Now you want the benefits of a different product you didn't buy.   

You are the one being greedy. Not the lender.

DullGreyGuy

They are allowed to do it because you signed a contract saying they can... on a variable rate mortgage it will be tracking some external index like the Bank of England base rate and so movements are out of their control.

When they do the affordability checks they already consider how affordable it will be if the tracker increases but that is as at the point of purchase when you agree to this being how your mortgage will work going forward

MorningcoffeeIV

mikeb222 said:

So it makes my blood boil when the same companies simply send me a letter every month stating "your mortgage payments have increased by another £50 or whatever". So how is this even possible? 

I don't understand how you can be old enough to get a mortgage, yet ask something like this.

Are you sure you have a mortgage? Or are you asking on behalf of your parents or something?

Merlin139

Have you solved the problem of your interest only mortgage that ends in 2 years?

https://forums.moneysavingexpert.com/discussion/6427329/over-60s-mortgages#latest

As to starting a campaign to stop the mortgage companies hypocrisy, I'm not sure how far you will get with that.

Sea_Shell

Quite a few of us probably remember back when every month (it seemed) you received a letter saying your monthly mortgage payments were going down... again. 😉

mi-key

I'm not sure if this is a joke post or something?  You don't seem to have understood what product you have signed up for, or how it works? 

You previously made this post about your decision to take out an interest only mortgage 

OK, I know some folk will say "it was your own decision" but I really believe that Interest Only mortgages are a scam.

We, like a lot of folk, brought our house using interest only because it was the cheapest way and nobody checked that we could pay it back. We were gambling that house prices would continue rising of course, but we still had no way of paying off the capital when end of term came.

This can't be right!
Surely the mortgage company are jointly responsible.

And also made a post saying you don't have enough equity to pay off the mortgage when it ends in 2 years ?