Interest Only Lending

The Society offers a flexible, tailored approach to its mortgage services, and is able to accept mortgages on a repayment basis, interest-only basis or mixed repayment/interest-only method.

Many people choose an interest only mortgage, or a mixed repayment / interest only method as it can mean that monthly payments will be lower than a repayment mortgage.

With an interest-only mortgage, repayments only cover the interest on the amount borrowed and nothing off the original loan. Applicants must put in place and maintain a suitable repayment plan or strategy (referred to as a repayment vehicle) to pay off the balance at the end of the mortgage.

Interest-only mortgages require that only the interest during the term of the mortgage is repaid. The mortgage balance itself remains at the same level throughout the mortgage term.

Interest-only criteria*:

  • Maximum loan to value (LTV) on interest-only loans is 50%
  • A mix of interest-only and repayment is allowed up to the LTV product limit but the interest-only element must not exceed 50% LTV 
  • Evidence of a suitable repayment vehicle is required for all interest-only or part interest-only residential applications. Suitable repayment vehicles are:

  1. 1. With-profits or Unit-linked endowment policy

  2. 2. Downsizing from main residence mortgaged to the Society

  3. 3. Sale of another UK property

  4. 4. Pension lump sum

  5. 5. Cash savings
  • A mortgage offer will only be issued once the Society has evidence of a suitable repayment vehicle that meets our criteria. Documentary evidence of the repayment vehicle should be submitted at the time an application is submitted
  • The maximum LTV on interest-only loans of 50% will not apply to existing borrowers who will be allowed to port their interest-only loan if they move house. If additional borrowing is required then this must proceed on a repayment basis
For details of the charges payable in connection with a mortgage application, please refer to our Tariff of Mortgage Charges.
 

*Only applies to residential lending where the loan to value is 80% or less 

new home

 
 


Privacy & Cookies

We use cookies on this website to help make your experience of this website better. In compliance with changes to EU cookie legislation, and to control and remove cookies, please view our Privacy & Cookie policy. Please note, by continuing on this site you are agreeing for cookies to be placed on your computer.

I accept

This notice should only appear the first time you visit the site.