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Lender halts interest only mortgages for new customers
Lender halts interest only mortgages for new customers
High street lender Nationwide has announced that from October 11th 2012 it will no longer offer interest only mortgages to new customers.
Maidenhead,
Berkshire,
United Kingdom
(prbd.net)
31/10/2012
High street lender Nationwide has announced that from October 11th 2012 it will no longer offer interest only mortgages to new customers.
Existing Nationwide borrowers will be unable to increase their mortgage if they are on an interest only deal, however they can move home so long as they won't be borrowing any more money.
This new development follows their announcement in March that their customers borrowing more than 50% of the property's value could not go on an interest only payment scheme.
Interest only mortgages account for only 3% of Nationwide's custom, but many of their borrowers will have had an interest only mortgage and will find it difficult to move up the property ladder without changing to a repayment mortgage.
Interest only mortgages do not reduce the size of the loan, and were very popular when the market was at its peak because although the debt wasn't being reduced, borrowers relied on an increase in house prices to make up for this.
Since 2007, interest only deals are much more few and far between.
Richard Alton runs Alton Mortgages, a whole or market broker based in Maidenhead. Established in 2005, customer service is at the heart of what they do, and they recognize that their clients are individuals with very unique requirements. He says:
" This is a real blow for people with interest-only mortgages, some of whom don't even realise that they aren't reducing the balance of their loan.
"As a whole of market mortgage broker we have a huge responsibility to ensure our customers are aware of what this means and have a plan is in place to pay the loan off at the end of the mortgage term.
"We deal with a lot of high earners who take home significant bonuses and many banks will only take ISAs and Endowments as suitable repayment vehicles rather than bonus payments, inheritances or sale of businesses.
"Every customer is being treated the same, but banks need to realise that every customer is different and that is why it is so important for customers to work with a whole of market mortgage broker as we really do know what we are doing and hopefully wouldn't have any confused customers at the end of a mortgage thinking they were on interest only rather than repayment."
Notes to Editors
Alton Mortgages is an established whole of market mortgage broker based in Maidenhead, Berkshire. Established in 2005, customer service is at the heart of what we do, and we recognize that our clients are individuals with very unique requirements. Click here to find why you should use a broker. We work with individuals and families to provide them with an exceptional residential mortgage service. Click here to find out more about Alton Mortgages
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About
Alton Mortgages is an established whole of market mortgage broker based in Maidenhead, Berkshire. Established in 2005, customer service is at the heart of what we do, and we recognize that our clients are individuals with very unique requirements.
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