Woolwich will no longer allow interest-only or part-interest only and part-repayment mortgages for those borrowers who require a 75 percent loan to value ratio (LTV).
From 25th October, Woolwich will now also change the way it calculates affordability as well. Instead of calculating the affordability over the mortgage term, the calculations will be worked out over either an assumed mortgage length of 25 years or up until retirement age or age 70 for the main income provider, using whichever would be the soonest, according to a report by Money https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpgeting.
Repayment plans can include the standard repayment schedule for a mortgage or other vehicles accepted could include existing unit trusts, bonds, investment plans, stocks and shares ISAs or endowment policies.
Selling a mortgaged property would also be classed as a potential repayment vehicle if that property has a minimum of £150k equity and a maximum LTV of 66 percent.
The mortgage section of Barclays bank also intends to conduct sample checks on a random basis with clients to ensure the repayment vehicles quoted on the original application form can still be evidenced.
Mortgage advisors received an email from the Woolwich saying:
“We firmly believe that interest-only mortgages have a place in the mortgage market. However, the current economic conditions of low interest rates, coupled with uncertain trends in terms of future house prices have meant it may not be suitable for some clients to take out interest only mortgages.
“As a responsible lender, we want to work with you to ensure that customers are sold the most appropriate mortgage for their circumstances.”