A few years after clamping down hard and putting an end to the interest only type mortgage loans, they are now roaring back in grand style thanks to some major lending names. Back in 2012 interest only loans were placed on indefinite hold as many house owners were able to take advantage of the financial product. It was a no nonsense way for potential house buyers to pay on just the interest each month without tackling the additional cost of the principle. Lenders saw this as a way to finance properties and see profits on the loans come back to them as home values increased over time.

The loans were introduced in 2007 which coincided with the economic crisis as a way to increase the affordability of houses during tougher times. As the recovery gained traction and fundamentals within the economy returned to normal, these loans were shut down. More people were affording homes and lenders had no reason to offer the products.

Now, some high profile lending institutions are jumping back in the interest only game and offering the product for those willing to take the risk and pay off the loan with the gains made through selling their house. There are qualifying standards which must be met including certain income levels for joint and individual as well as LTV amount. To date, almost 80% of borrowers are using this product as a way to remortgage.

Leeds spokesman Martin Richardson commented on the interest only type of mortgage loan, saying: “This is broadly in line with what we would have anticipated.”

Richardson added: “It is a useful middle way for a borrower who has an interest -only mortgage but hasn’t made progress in paying down the capital, as they can start to reduce this without the payment shock of switching to a full repayment mortgage.”