Abbey for Intermediaries has come under fire again for its interest-only policy after it revealed last week that it would no longer pay a proc fee for certain ported deals.
After reducing its maximum LTV for interest-only mortgages from 75% to 50% earlier this month, the lender now says it will no longer pay a proc fee to brokers for borrowers who port their interest-only mortgage above 50% LTV.
Abbey is allowing existing borrowers with an LTV of 50% to 75% to port their mortgage as long as they want to borrow the same amount or less, but says borrowers will need to contact the lender direct for the deal. It will continue to pay proc fees on interest-only cases ported below 50% LTV.
Customers who wish to borrow more and have an LTV above 50% can port via a broker to a capital and interest mortgage.
David Hollingworth, mortgage specialist at London & Country, says: “This move is peculiar as it means customers will be treated differently based on their LTV, when all customers should be given advice.
“It may not affect brokers’ business hugely but it is the principle that counts.”
David Sheppard, managing director at Perception Finance, adds: “I don’t think the change will have as big an impact on brokers as some people think, because it only affects a specific group.
“The bigger issue is that a lot of people who wish to port their mortgage want to trade up and borrow more. They will either have to pay the early repayment charge or switch to a repayment mortgage, but they may well be unable to afford either.”
Also last week, Leeds Building Society cut its maximum LTV from 70% to 50% for interest-only loans where the repayment vehicle is the sale of the property.
It will continue to lend up to 75% LTV on an interest-only basis for borrowers using savings or an investment vehicle as the repayment strategy.