How much interest do you pay?

The entire point of affordability tests is to show whether you can afford the payments or not. If you can, then you should find it reasonably easy to prove that you can.

 

The introduction of affordability checking was entirely sensible IMO, not crazy.

Unfortunately it's not the case that affordability is easily proved. Case in point - when buying our first house, my wife was working as a locum doctor. Since she only had a few months' locum work behind her (previously working as a GP), they would not take any of her income into account.

The irony being that as a locum she essentially had access to as much work as she was willing to take on, and could cover repayments working even a small number of shifts. Moreover, she had no risk of redundancy, whereas if I were to lose my employment (which the mortgage offers were based on), I could potentially be out of work for many months while seeking new work.

I can see the logic behind lenders being cautious about self-employment, but you would think that their risk assessment would be better served by differentiating between higher and lower risk forms of self employment.

---------- Post added 17-01-2017 at 09:50 ----------

The idea behind the affordability criteria is great but the tests they do are awful. If your circumstances change you might now fail the affordability test meaning that you are stuck on the lenders very high rate after the initial period ends. We are talking people now currently stuck on 5-7% mortgages because they had a baby and now have to spend money on a nursery fees etc. I have friends who are struggling to pay there mortgage because they can't remortgage because they failed the affordability test. They are stuck at a rate of nearly 6%, yet they are still (but only just) paying all bills every month. They could get a new mortgage at 2% and over paying on the mortgage or have savings but the affordability test means that they cant re-mortgage at all and it is costing them over £400 per month. So that is why I think that tracker mortgages are the best.

Am I correct in thinking that if you apply for a new mortgage deal with your existing lender rather than a new lender, then they won't carry out a full affordability assessment? Assuming of course that you aren't changing the amount or duration of the mortgage, but just applying for a different borrowing rate?

Unfortunately it's not the case that affordability is easily proved. Case in point - when buying our first house, my wife was working as a locum doctor. Since she only had a few months' locum work behind her (previously working as a GP), they would not take any of her income into account.

 

The irony being that as a locum she essentially had access to as much work as she was willing to take on, and could cover repayments working even a small number of shifts. Moreover, she had no risk of redundancy, whereas if I were to lose my employment (which the mortgage offers were based on), I could potentially be out of work for many months while seeking new work.

 

I can see the logic behind lenders being cautious about self-employment, but you would think that their risk assessment would be better served by differentiating between higher and lower risk forms of self employment.

 

---------- Post added 17-01-2017 at 09:50 ----------

 

 

Am I correct in thinking that if you apply for a new mortgage deal with your existing lender rather than a new lender, then they won't carry out a full affordability assessment? Assuming of course that you aren't changing the amount or duration of the mortgage, but just applying for a different borrowing rate?

Depends on the lender, some lenders will offer a new rate (deal) at the end of your current deal no matter what your circumstances are (Halifax for example) Other lenders will want to re-check affordability and may even refuse to offer you a deal or offer you a poor deal. The lender is under no obligation to offer you another deal but many do as they want to keep your business.

Cyclone, the affordability checks are 100% sensible I want argue that point but there does need to be some flexibility or common sense when it comes to mortgage prisoners that are unable to obtain another deal due to change of circumstances.

My own mortgage is with Halifax because I now have the peace of mind that no matter what happens to me or my circumstances when my 2 year fixed rate ends I won't be stuck on their variable rate.

We are talking people now currently stuck on 5-7% mortgages because they had a baby and now have to spend money on a nursery fees etc. I have friends who are struggling to pay there mortgage because they can't remortgage because they failed the affordability test. They are stuck at a rate of nearly 6%, yet they are still (but only just) paying all bills every month. They could get a new mortgage at 2% and over paying on the mortgage or have savings but the affordability test means that they cant re-mortgage at all and it is costing them over £400 per month. So that is why I think that tracker mortgages are the best.

Coventry Building Society, 1.99% and 10 year fixed; and £8 set up fees. I will be looking around when I am ready in a few months.

Such a low rate would help to make any mortgage more affordable.

https://www.moneysavingexpert.com/mortgages/best-buys/?page=results&pageNumber=1&mortgagetype=FIRST_TIME_BUYER&amountborrow=38%2C000&propertyworth=105%2C000&repayyears=18&producttype%5B%5D=FIXED&banks_filter=&providerFilter%5Bbank%5D%5B%5D=-1&building_societies_filter=&providerFilter%5Bbuilding_societies%5D%5B%5D=-1&productlength%5B%5D=5&productlength%5B%5D=10&productlength%5B%5D=-1&resultsOrder=MSETrueCost

The idea behind the affordability criteria is great but the tests they do are awful. If your circumstances change you might now fail the affordability test meaning that you are stuck on the lenders very high rate after the initial period ends. We are talking people now currently stuck on 5-7% mortgages because they had a baby and now have to spend money on a nursery fees etc. I have friends who are struggling to pay there mortgage because they can't remortgage because they failed the affordability test. They are stuck at a rate of nearly 6%, yet they are still (but only just) paying all bills every month. They could get a new mortgage at 2% and over paying on the mortgage or have savings but the affordability test means that they cant re-mortgage at all and it is costing them over £400 per month. So that is why I think that tracker mortgages are the best.

Yeah, that's kind of crazy, the fact that they are paying it should prove that they can pay it, particularly at a lower rate!