At least 47 high street banks and building societies are providing interest-only mortgages to borrowers with equity in their property or larger salaries.
Barclays, Clydesdale Bank, Halifax, HSBC and Metro Bank are some of the biggest banks to provide interest-only mortgages, while smaller lenders like the Teachers Building Society regularly offer terms. Newcastle has also entered this market.
The interest-only mortgage market has recovered since most of the lenders pulled out. On the 20th March 2013, HSBC, Yorkshire Building Society, Barnsley Building Society, Chelsea Building Society, Norwich & Peterborough, and broker-facing brand Accord Mortgages all stopped offering interest-only.
Aaron Strutt, product director at Trinity Financial, says: "If you are looking to keep your monthly payments low and have a plan to repay the mortgage, then interest-only can be a useful alternative to full capital repayment.
"There are more interest-only options available at any time since the credit crunch and the rates are normally the same. Our brokers are arranging more part interest-only and part capital repayment mortgages, so some of the outstanding balance is repaid each month."
To qualify for interest-only with NatWest at least one applicant will need to earn a minimum basic salary of £75,000, but other smaller lenders do not have a minimum income requirement. Santander recently improved its criteria allowing 50% of the mortgage on interest-only and 35% on capital repayment.
Last year UK Finance reported 1.7 million interest-only mortgages were outstanding in the UK with around 200,000 due to mature by 2020.
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