Mis-sold Mortgage Claims > Mortgage News
Interest-only mortgages continue to be restricted for borrowers
Thu, 14 Apr 2011
The Nationwide is the latest large lender to reduce the loan to value (LTV) on its mortgages to 75 per cent. This is in line with other lenders including Halifax who have recently reduced their LTV from 85 per cent to 75 per cent.

The Mortgage Works (TMW), a lending subsidiary of Nationwide who offer specialist lending, including buy to let (BTL) has also had its residential mortgages capped at 75 per cent LTV; this has not been applied to their BTL mortgages.

Industry experts have commented, saying, many lenders have changed their criteria to restrict their lending and exposure to higher LTV’s following proposals made in the mortgage market review . It enables them to continue to "cherry pick" borrowers, it does however, pose problems for existing borrowers who have higher LTV’s and can not change their rate. Many will be subjected to payment shocks.

The Financial Services Authority (FSA) has made it clear that it has no intention of banning interest-only mortgages . They have focused on the borrower’s ability to afford a mortgage and lenders "robust assessment" of this, on an interest-only or repayment basis.

There are still some lenders who offer mortgages to 85 per cent LTV on an interest-only basis; this includes some small building societies and Aldermore Mortgages the new specialist lender .
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