Coventry lowers interest-only mortgage deposit requirement to 25% of the property value
Quick Summary
Coventry Building Society has reduced its minimum deposit requirement for residential interest-only mortgages from 50% to 25%, allowing eligible borrowers to access interest-only lending at 75% loan-to-value (LTV). Coventry has no minimum income requirement, although borrowers must meet affordability assessments and demonstrate an acceptable repayment strategy.
Other leading UK interest-only mortgage lenders include NatWest, Nationwide, HSBC, Halifax, Leeds Building Society and Skipton Building Society.
NatWest offers up to 80% LTV with qualifying investments, while Nationwide provides interest-only mortgages up to 75% LTV and part-and-part mortgages up to 85% LTV, subject to criteria.
Interest-only mortgages can be attractive to higher earners, homeowners with substantial equity and borrowers seeking £1 million-plus mortgages. Monthly payments are generally lower than equivalent capital repayment mortgages, but the outstanding loan must eventually be repaid.
Trinity Financial's mortgage brokers compare interest-only mortgage lenders, deposit requirements, affordability criteria and acceptable repayment strategies to help clients find suitable mortgage options.
Coventry for Intermediaries has eased its interest-only mortgage criteria, lowering the deposit requirement from 50% to 25% of the property value.
Coventry has no minimum income requirement to access its interest-only mortgages, but applicants must have sufficient income to support an equivalent repayment mortgage and meet the repayment affordability checks. The maximum term is 40 years, and Coventry does not accept new Interest-only applications on a part/part basis.
For all new Interest-only applications, there must be a minimum of £200,000 equity for properties in all regions outside London and the South East, and £300,000 equity for properties for the ONS administrative regions of London and the South East, remaining at completion of the mortgage regardless of the applicant's chosen repayment plan.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “We’re continuing to look for ways to give brokers more options when supporting their clients’ homeownership and property goals. By broadening our interest-only criteria, we’re making this option available to a wider range of suitable borrowers.
"These latest changes build on a number of enhancements we’ve made in recent months, all designed to help brokers find the right solutions for their clients.”
Which other mortgage lenders have good interest-only policies?
Coventry Building Society is not the only mortgage lender offering more flexible interest-only borrowing. Several major UK banks and building societies allow eligible borrowers to take out interest-only mortgages with a 25% deposit, while some offer higher loan-to-value limits or flexible options for borrowers with investments, pensions and other properties.
Interest-only mortgages can be particularly attractive to higher earners, homeowners with substantial equity, borrowers arranging £1 million-plus mortgages and clients who want to keep their monthly mortgage payments lower.
Decent interest-only mortgage lenders compared
|
Mortgage lender |
Interest-only policy (loan-to-value) |
Key advantage |
|---|---|---|
|
Coventry Building Society |
Up to 75% LTV |
Accepts sale of property and other eligible repayment strategies |
|
NatWest |
Up to 80% LTV with eligible investments; 75% using sale of main residence |
Particularly flexible for borrowers with investments |
|
Nationwide |
Up to 75% interest-only; 85% part-and-part |
Loans up to £5 million and a wide range of repayment plans |
|
HSBC |
Up to 75% LTV, subject to loan size |
Attractive for higher earners with savings or investments |
|
Halifax |
Below 75% LTV |
Range of acceptable repayment plans |
|
Leeds Building Society |
Up to 60% fully interest-only; 75% part-and-part |
Flexible split between repayment and interest-only borrowing |
|
Skipton Building Society |
Interest-only available subject to criteria |
Useful alternative for borrowers with an acceptable repayment strategy |
Source: Trinity Financial
Aaron Strutt, Product Director at Trinity Financial, comments: “There are more competitive interest-only mortgage options available than many borrowers realise, particularly for those with larger deposits, substantial property equity or investments.
“The key is understanding which lenders accept different repayment strategies. Some will consider the sale of the mortgaged property, while others want evidence of savings, investments or other assets. Comparing these policies can make a substantial difference to the mortgage options available.”
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The information contained within was correct at the time of publication but is subject to change. It is for general information purposes and is not advice.
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