Increasing LTV (loan to value) from 50% to 60% on all Interest Only mortgages is the latest improvement to Leeds Building Society’s criteria on this type of lending.
The change applies across the Society’s Interest Only range, including its innovative and award-winning part and part mortgages. Part and part deals are available up to 75% LTV – now the Society will lend up to 60% LTV on interest only and the remainder on a capital and repayment basis.
Since launching part and part mortgages in May 2015, the Society has won industry praise and trade awards for the innovation which allows borrowers to combine interest only and capital and repayment elements in their mortgage.
Leeds Building Society also has refined its minimum equity requirements for borrowers intending to use sale of the property as a repayment strategy, taking regional variations in property values into account to give greater flexibility and a more tailored service.
Unlike many Interest Only lenders, the mutual accepts sale of property as a repayment strategy and does not impose minimum income requirements.
All Interest Only applications to the Society are processed by specialist underwriters and, as a responsible lender, the Society assesses affordability for all borrowers, including Interest Only, on the basis of a full capital repayment mortgage.
“We believe our Interest Only proposition is unique in the market for the combination of lending criteria,” said Richard Fearon, Leeds Building Society’s Chief Commercial Officer.
“The changes we’ve made are intended to help more borrowers who are not well-served by the wider market as we respond to borrowers’ and intermediaries’ feedback innovatively and responsibly.
“Refining and improving our Interest Only lending criteria is a way we can do this, to achieve our purpose to help more people to have the home they want.
“Our Interest Only deals come with a range of fee and incentive options – we know the fees assisted part and part products have been particularly popular with homeowners looking to remortgage from existing interest only loans.
“Part and part can offer borrowers more flexibility in reducing their mortgage debt in a manageable way, when they have an endowment shortfall, for example. It also can suit borrowers whose salary is expected to rise, such as through professional qualification.”