Halifax introduces £100,000 minimum income to qualify for interest-only

by Aaron Strutt

Nov 18 2016

Halifax for Intermediaries has made changes to its acceptance criteria to make it easier for wealthier borrowers to secure interest-only mortgages.

The bank has introduced three new repayment plan types for clients’ who meet its minimum income requirements. They include, the sale of the mortgaged property, bonus payments and cash savings.

Minimum income and sale of the mortgaged property

If you would like to use one of the new interest-only repayment plans you will need a minimum income of £100,000 to qualify. For a joint application, one applicant must have a minimum income of £100,000 or the combined income of both borrrowers must total a minimum of £150,000.

If you are using the sale of the mortgaged property as a repayment vehicle, you will need at least £200,000 equity in the property to qualify.

Halifax will accept the sale of the property to a maximum of 50% loan-to-value on interest only. Borrowing above this, up to 75% loan-to-value, would be available on a capital and interest basis.

Cash bonuses and savings

The bank will now take 30% of the annual cash bonus amount and multiply it by the mortgage term to give an amount of interest-only cover available. However, if the bonus payment is used as a repayment plan the bank will not include any bonus payments in its affordability calculations.

Halifax can use a cash savings balance for interest-only where the client can evidence the amount has been held for at least three months before the date of the application. There is a minimum £50,000 requirement and the client cannot use the same cash for the purchase deposit.

Pension income

The bank has also made changes to its existing pension income requirement to qualify for its interest only repayment vehicle.  There is no minimum income to qualify for this plan and the bank will now accept a projected value of the total pension fund rather than the current values.  The lender requires a minimum income of £400,000 projected fund and it can use 15% as a repayment plan.

Commenting on the changes, Halifax for Intermediaries head of lending, said: “Making sensible changes to our existing policies including how pensions are treated as well as bringing in new options not only demonstrates our ongoing commitment to intermediaries, but provides greater access for borrowers who can benefit from interest-only products where they may be a more suitable option.”

To secure an interest-only mortgage, call Trinity Financial on 020 7016 0790.