AIBU to be totally panicked by our remortgage?

[ploddingalong2023]

We haven’t remortgaged before. Got our first mortgage 2 years ago. We are due for a remortgage in August, fully accepted that it is going to go up with the current climate but my worry is our salary change.

since our original mortgage, no partners salary has remained the same but mine has reduced slightly as I have dropped a day to spend more time with our little one. (Something we had always planned after I returned from Mat leave)

Our salaries now don’t combine to the 4/4.5 x that a lot of mortgages rely on.

however, we manage every month. (It’s tight but we made that choice when we bought) but as I say we manage and have never ever missed a payment for anything, mortgage included.

is remortgaging easier than getting the original mortgage? Will other lenders, if they offer a better rate, offer even though we are under the 4 x rate? (Marginally)

will they take into consideration 2 years of paying a mortgage with no misses?

The whole process is quite stressful and confusing to many, I always presumed they would revalue the property anyway at remortgage time as many homes have risen in value over time so this could potentially put customers in to better ltv bracket's hence better intrest rates.

Most lenders go with the principle of no changes to the loan/term they'll accept you can still afford it with no checks. Any material change (loan amount, term, people who are party to it etc) they'll treat as if its a new application and redo all the checks.

There's a house price index which gives an idea of the house price growth and they'll apply that percentage to the value when you took out the loan. They can revalue but most won't, unless they want to check the house for any reason (suspect broken T&Cs etc).

Just stay with current lender, no checks then

We had come to the end of our 25 years & have around 45k left to pay which was added on when we moved house. We have never missed a payment in 25 years. Our rate was coming to an end so had to call up to discuss. It was almost 2 hrs on the phone & I had to prove salaries by sending over photo evidence & confirm what we would do if we lost jobs etc. So I think they may ask for salary. It went up from £660/month to £760/month. The whole thing is ridiculous. I have no idea how you can afford it when it's 4 x your combined salaries.

Find a mortgage broker.

I also had to give great detail about all other outgoings - bills, food, car loan, kids activities. Everything basically. For £45k of borrowing. Halifax. Maybe they're more cautious than other lenders.

@converseandjeans is your term really short or is your rate extortionate? Our mortgage is around £250k and we pay double what you do on a variable rate tracker , but you've borrowed less than a fifth of the amount we have

@converseandjeans you came to the end of your overall term, that's a material change as you're essentially negotiating a whole new mortgage term. The end of a fixed rate period is different, you're still agreeing to pay for a term it's just the additional interest that's changing.

I think if rates went up more than 5-10% from your first lot of affordability check, which is a range used within the checks to confirm you can afford it longer term, then maybe it would be different. But the first lot of checks account for changes in the market.

You might get asked to confirm your circumstances haven't changed, but how you choose to answer that is up to you, if you know you can afford it.

Seeing as you all seem more adult than me
I've never remortgaged either yet, if you go with a new lender do you have to do all the solicitor/valuation stuff again? Or is it different?
I'm with an adverse lender at the minute but when I remortgage I'm likely to be looking at high street

Is it the case that lenders don’t bother investigate as long as the new rate is lower than the application stress test?

Otherwise what would they do if mort now ‘unaffordable’?

I do wonder how they decide LTV on remortgage? Just assume it’s gone from say 75 to 60% based on payments made against original loan?

Yes. Your new lender will want to confirm your property meets their criteria. And you will need solicitors to change the charge on your property title from current lender to new.

Affordability checks are stress tested to a much higher level than the rate offered. That's why people are not losing their homes left right and centre at the moment. In the OPs case their circumstances have changed hence she should really stay with the same lender and the best deal that is on offer with them.

If staying with the current lender, they don't check affordability for a new product, because every new product is going to be cheaper than the SVR and they have already got a contract with you that defaults to the SVR after the fixed term expires.

Affordability checks inclue an assessment to whether you could afford it if the rates went up by 5-10% (depending on lender)

Rate switch with your current lender onto a better rate.
I'm in the exact same position as you and we're going to stick where we are but leave it right to the last minute before we switch & pray rates go down.
I'm also a mortgage advisor and I know on paper I can't afford to remortgage due to childcare, another kid & dropping my hours.

@IpsyUpsyDaisyDoos ugh. Thank you! I used a broker last time which was expensive but well worth it

Your situation sounds unusual - what do you mean when you say you had come to the end of your 25 years but still had outstanding amount owing?

For most people, once the 25 years are up they will have paid off their mortgage so no conversation to have.

Have you had your child since your fiest mortgage as well OP? As that will reduce the amount they will lend you massively! As well as reducing your salary

Honestly, just do the online product transfer, otherwise you are risking tbem not giving you a mortgage for enough money

I think if you reduce what you owe they will not redo checks.

However the way around that is to transfer the same balance to a new product and then overpay straight away.

If you do a product switch with the same lender and aren't trying to borrow any more they may not bother with doing any affordability checks etc. My lender didn't (Yorkshire Building Society) but I don't know if that's a universal policy.

Brokers are a good call if you're unsure. Some (Connells are one off the top of my head) if you take a mortgage through them will charge an extra fee (£600 ish I think) and do your remortgage for free (other than associated costs) for life. Could be worth it if you find it a minefield.

I spent MANY years underwriting mortgages and still work in finance companies, and still used a broker for our FTB. They sometimes have access to preferential rates too.

To protect you as a customer.

Let's say you have a 3% fixed term mortgage.
At the end of that you transfer automatically to the lender's SVR of 8%.
The bank has a new fixed term mortgage of 5%.

It would be grossly unfair if the bank would refuse to let you borrow at 5%, forcing you to default to 8%.

Twenty five years ago they might have got an endowment mortgage and the investment hasn't pay off the whole mortgage so there's still £45K to repay.

Yes that is why I said theor situation was unusual and asked why they had the balance - in your scenario they are seeking to extend the term, this is not a standard product switch, so their experience is not applicable to the OP's question.

The current lender is already on the hook at this stage. They've lent you that money. So when your fixed rate ends they can either let you choose a new product/rate with them, or force you onto SVR (meaning higher repayments and therefore a higher rate of default, which they don't want) or risk losing you as a customer altogether (which they don't want).

Imagine you lent someone a £100 to be repayed at £1 per month for the next x years. No point checking after 2 years whether they can still afford the £1 a month. You've already lent them the money.