Woolwich to restrict interest-only mortgage lending from 25th October 2010

Published ¤ 22/10/2010 13:31:09

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With effect from Monday 25th October Woolwich, the mortgage lending arm of Barclays, will be making changes to their residential lending policy for interest only mortgages.

In a recent update, Woolwich said: "We firmly believe that interest only mortgages have a place in the mortgage market. However, the current economic conditions of low interest rates, coupled with uncertain trends in terms of future house prices have meant it may not be suitable for some clients to take out interest only mortgages.
"As a responsible lender, we want to work with you [the broker] to ensure that customers are sold the most appropriate mortgage for their circumstances. In looking to protect the long term interests of your [the broker's] client, we are making some changes to our lending policy regarding interest only mortgages."
Key Changes

  • Any mortgage over 75% LTV must now be fully repayment.
  • All affordability calculations will be done on a repayment basis regardless of whether or not it is an interest-only mortgage.
  • Interest-only mortgages will no longer be allowed where a repayment plan is not already in place.
  • A pension will no longer be allowed as a repayment vehicle for interest-only mortgages.
  • Random checks will be made to evidence the repayment vehicle stated in the application.
This list is not exhaustive, but highlights the main changes to the lender's new policy.
If you are concerned about your mortgage options, speak to PKS, one of Hampshire's top brokers. For "truly" independent advice, call us on the number above.

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