Mortgage companies are warming up to interest-only loans as several lenders have re-entered the market in the last year.
Data published by Moneyfacts, the financial analysts, showed the number of lenders offering interest-only loans increased to 33 in the last year. This charge has largely been driven by the mutual sector with Accord (part of the Yorkshire Building Society) and the Hanley Economic, Hinckley & Rugby and Leek United building societies entering the market. “I have clients in Wolverhampton who have used these particular building society’s and been very happy with the product and the recommendations regarding the mortgage”.
Interest-only mortgages are loans where the borrower is not required to pay down the overall debt each month, instead they merely pay the interest accrued on the loan. While this makes the monthly payments much cheaper, it means the customer has to pay off the entire cost of the property at the end of the term. However, things have changed and lenders are looking to satisfy the needs of borrowers the City watchdog, the Financial Conduct Authority, had recently loosened the rules on retirement interest-only mortgages, which would also boost the sector. “At Apple Finance we’ve seen an increase in the demand for interest-only mortgages, in the Wolverhampton area, due to lifestyle changes, equity releases and niche customer situations.
“More lenders are coming back into this area to offer interest-only mortgages. Seeing mainstream lenders in this space means that the criteria has expanded, so interest-only mortgages are no longer restricted to high income earners or those with lots of equity.” Of the big banks, Barclays, NatWest, Royal Bank of Scotland and Santander all offer interest-only loans, but only to wealthy borrowers with a large amount of equity in their properties or sizeable deposits.
If you do have a mortgage enquiry for a no obligation chat contact Apple Finance on 01902 213201