Majority of the largest lenders offering interest-only mortgages again
Virtually all of the top lenders are providing interest-only mortgages again as they target borrowers who want to minimise their monthly costs.
Coventry Building Society recently re-entered the interest-only market after a near-decade absence, while Nationwide widened its interest-only range to property purchases rather than limiting the option to those remortgaging to the society.
NatWest changed its interest-only income criteria in November to match its capital repayment policy which means bonuses can be considered for affordability, and Barclays enhanced its part repayment and part interest-only criteria by increasing its loan-to-value, so those with a 15% deposit qualify when they are a Barclays Wealth Management or Premier Banking borrower.
Metro Bank is also allowing applicants to have interest-only when they consolidate debt. The lender increased its part and part loan-to-value when the property's sale is the repayment strategy.
Aaron Strutt, product director at Trinity Financial, says: "Interest-only mortgages are popular with our clients, and they are much more widely available than they were a couple of years ago. Interest-only isn’t suitable for everyone, but it is useful, particularly during a financial downturn where people want better control of their money."
The majority of borrowers take full capital repayment mortgages, while part interest and part capital repayment deals are more suitable for many homeowners who want to lower their monthly repayments.
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