Homeowners will Find it More Difficult to Get Interest Only Remortgage

Homeowners will Find it More Difficult to Get Interest Only Remortgage

Homeowners that have been considering an interest only remortgage or those buyers that have thought to obtain an interest only mortgage will find it more difficult to meet the deposit.  Interest only loans have been criticized of late as putting the borrower in a risky financial situation.  In an attempt to hold off those borrowers that should not be taking out an interest only deal lenders have been slashing their loan to value (LTV) levels on all interest only lending.

Coventry, the UK’s third largest building society, has added their interest only deals to the list of those decreasing their LTV levels.  Coventry has moved their maximum LTV on interest only loans from 75 per cent to 50 per cent.  This change will impact both its direct and intermediary brands and borrowers that pursue a product change but it will not impact the buy to let products.  Other lenders that have also cut their LTV levels are Santander, Halifax, Leeds Building Society, Yorkshire Bank, and Nationwide.

A spokeswoman for Coventry, said, “Following moves by a number of other lenders to restrict their criteria for interest-only lending the Coventry has also reduced the maximum LTV to 50% where any aspect of the loan is interest-only.

“This will apply to residential, offset and further advance applications to ensure that our lending policy remains in line with the market.”

Homeowners that are considering a remortgage should take careful consideration in getting a new deal and in cases where they are unsure of which product would be best they should consult a remortgage expert. 

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