More changes to interest only mortgages

by Aaron Strutt

Apr 08 2011

Over the last year the vast majority of mortgage lenders have made changes to their interest-only lending policies and this week we have seen the last few remaining lenders offering more generous options for borrowers make changes.

The Nationwide Building Society, Halifax and The Post Office have all tightened their lending criteria. Nationwide were still offering 95% loan to value interest only mortgages to existing customers at the start of the week and Halifax have now reduced their maximum interest only mortgage to 75% loan to value. The Post Office now offers a maximum loan to value of 75% for interest only borrowers, down from 90%.

Aaron Strutt, a broker at Trinity Financial, says: “Mortgage lenders mostly ask for a 25% deposit to qualify for interest only now and if you want to borrow more than that, in many cases, the whole mortgage will have to be on full capital repayment. This will increase your monthly payments, but the mortgage will be repaid at the end of the term.

“Some lenders are still more generous than others and we will continue to advise our clients of the best ways to structure their mortgage payments.”

April 8, 2011