Nationwide Building Society has re-launched into the interest-only residential mortgage market after an eight-year absence, Mortgage Solutions can exclusively reveal.
Interest-only will be offered through mortgage intermediaries up to a maximum loan to value of 60 per cent.
Borrowers must have minimum equity of £300,000 if they live in London, £250,000 in the South East and £200,000 for those living elsewhere in the UK.
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The exit strategy is restricted to the sale of the main residence only. Part and part mortgages are also allowed, subject to the same criteria.
The society has set these parameters to mitigate the risk of future negative equity and to make sure there is a realistic means of repaying the debt at the end of the mortgage term, Mortgage Solutions understands.
The minimum income requirement is £75,000, or £100,000 for joint income. There is a maximum term of 25 years, or retirement if sooner.
Mortgage Solutions understands this is because Nationwide wants to target the proposition at higher earners who want to use interest-only for flexibility, not because they cannot afford a full repayment mortgage.
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Henry Jordan, Nationwide director of mortgages, said: “As the UK’s second largest lender, it is natural that we continue to look at ways we can support the mortgage market.
“At almost seven per cent, interest-only remains an important part of the market and one we are keen to support by providing access to our standard product range to applicants with good equity and stable income profile.”
The launch is expected within the next two months.
By Samantha Partington
Source: Mortgage Solutions