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Interest only

23/08/2017
  • Permitted on specific products – refer to product guide
  • Maximum LTV 60%
  • Minimum equity £175,000 (£250,000 where downsizing is the repayment strategy)

Repayment strategy:
Must be held in the UK in £ Sterling. Repayment strategies held outside the UK or not in £ Sterling are not acceptable

Endowment policy

  • Projection from the provider based on current value and contribution levels
  • The Group will use the projected value based on the lowest of the standard growth assumptions set down by the Regulator as the amount that can be used on interest only
  • Term must coincide with or mature before expiry of the mortgage term

Commutable sum from pension

  • Projection from the provider based on current value and contribution levels
  • The Group will use the projected value based on the lowest of the standard growth assumptions set down by the Regulator as the amount to be used to calculate the maximum cash lump sum that can be taken
  • Term must coincide with or mature before expiry of the mortgage term. It must be both legal and practical for benefits to be taken at the end of the mortgage term

ISA

  • Projection from the provider based on current value and contribution levels
  • The Group will use the projected value based on the lowest of the standard growth assumptions set down by the Regulator as the amount that can be used on interest only
  • Where the investment is a cash ISA (or other cash based deposit), a calculation should be carried out based on the current value and contribution levels to assess whether there is likely to be sufficient to repay the proposed interest only amount at the end of the mortgage term. The interest rate used in the calculation will be prudent
  • Term must coincide with or mature before expiry of the mortgage term

Realisation of other assets/Investment properties

  • Ownership and value of assets must be able to be established together with details of any encumbrances. The value of the assets subject to any encumbrances must be sufficient to repay the loan in full at the end of the mortgage term. Assets must be held in the UK in £ Sterling

Downsizing

  • Equity of at least £250,000 must be available in the property. Subject to assessment of feasibility based on full details of applicant’s plan to move including estimate of date, location and type of property the applicant intends to move to

For Buy to let applications, the repayment strategy could be sale of the property

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