Yorkshire Building Society is offering interest-only repayment options to borrowers borrowing up to 75 per cent loan-to-value. However, borrowers must prove they could afford to repay the loan on a capital and interest basis.
Yorkshire Building Society senior mortgage manager Charles Mungroo says: “Demand for interest-only mortgages is increasing and for borrowers who have made an informed decision that this repayment method best meets their needs, and who have a clear strategy to repay the loan, we understand the additional flexibility interest-only can provide.
“As a responsible lender we have designed the interest-only repayment option in a way that reflects the needs of borrowers, while meeting those needs in a financially sustainable way. We’re confident the introduction of interest-only options will be welcomed by a number of customers in this market and are pleased to offer borrowers more choice.”
The Yorkshire is also offering interest-only repayment options on its offset mortgages.
To meet the newly introduced lending criteria, the Yorkshire requires borrowers to demonstrate they have an acceptable repayment strategy in place at the end of the mortgage term, which could include existing endowments or savings and investments.
The lender will allow the sale of the mortgaged property at the term end to be used as a repayment strategy, where the amount borrowed against this strategy does not exceed 50 per cent LTV and where there is a minimum of £200,000 equity in the property.