Affordability checks

I have a fixed rate, interest only mortgage and wanted to change to a repayment mortgage. 
My lender, as a responsible lender (their words), wanted to carry out an affordability check to ensure I could make the new monthly payments. 
My interest alone will automatically increase by £1000 per month if I don't lock in a new rate before the current deal ends.
My lender doesn't seem that interested in finding out if I can afford the automatic switch from fixed to standard variable rate though. 
Does anyone else think that's irresponsible of them?
I know the onus is on me but think it would be great if they carried out such checks when borrowers are coming to the end of their much lower fixed rate deals. 

Comments

  • What should they do if they decide you can't afford the SVR? Just refuse to continue your mortgage - so unless you could remortgage on a different product or with someone else, they would have to take your house?
  • housebuyer143
    housebuyer143 Posts: 3,168
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    edited 14 October 2023 at 6:15AM
    Why don't you just continue on interest only and make overpayments to reduce the capital? This is essentially repayment mortgage then with the benefit of you only being tied into the lower payments. 

    Legally a lender must do certain checks if you are taking or varying your mortgage, hence the new affordability check. This is not required in a product switch and it was agreed your product would roll into SVR when you took our the fix, so there is no requirement to do checks for this either.
  • ACG
    ACG Posts: 23,621
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    You are making a material change to your mortgage.
    What happens if you tie in to a 2 or 5 year deal and cant afford the repayments? You then risk being taken to court, having the cost of that added to your mortgage and the early repayment charges. 

    Can you not choose a new deal on interest only and then set up an additional payment to bring the balance down? Most mortgages allow you to overpay by 10% pa. So a £100k mortgage would see you being able to overpay by around £800 per month without having to go through the affordability assessment as it is not contractual... But obviously just check the terms of the mortgage as not all lenders allow overpayments. 
    I am a Mortgage Adviser
    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.
  • Ayr_Rage
    Ayr_Rage Posts: 823
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    Where are you saving/investing to pay off the capital ?


  • MWT
    MWT Posts: 9,119
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    My lender doesn't seem that interested in finding out if I can afford the automatic switch from fixed to standard variable rate though. 
    Does anyone else think that's irresponsible of them?
    I know the onus is on me but think it would be great if they carried out such checks when borrowers are coming to the end of their much lower fixed rate deals. 
    Be careful what you wish for...


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