Interest in interest only

Interest Only remains in the Spotlight this week as Lloyds Banking Group and Leeds Building society impose restrictions on those wishing to obtain an interest only mortgage. This is following Santander’s interest only loan reduction last week and Barclays/Woolwich previous to that.

Although Santander reduced the maximum LTV on interest only to 50 per cent, they did not change their criteria. However, Lloyds Banking Group (Lloyds, Halifax, C&G) have restricted acceptable repayment plans so that, despite keeping Interest only at 75% of the property value, many borrowers may not qualify. These repayment vehicles include providing proof of a pension pot in excess of £1m, cash savings are no longer accepted and sale of any residential property can only be used if current equity is over £50k and only 80 per cent of current equity can be used. It is reported that the other high street providers are not looking to follow suit. But we will see!

In more positive news, those who know AToM will know that, in addition to arranging mortgages for the general public, we are also a specialist packager/distributor looking after and arranging mortgages for other mortgage brokers, estate agents and independent financial advisers nationally. For some lenders, AToM acts as their administration arm, collating information, instructing valuation and processing applications right up to mortgage offer status.

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For other lenders, AToM will often be allocated a tranche of funds to distribute for them and AToM advertises and controls the administration process. Any mortgage broker, independent financial adviser or similar, who require these certain products, will often have to come via AToM to gain access to such products. The benefit to the lender is that AToM carry out all the work, including taking telephone calls, requesting information from employers/accountants, collating documentation, and more. So it’s cost effective for the lender.

With this in mind, we are delighted to announce our latest lending partner in this arena, called MBS Lending (part of the Melton Mowbray Building Society) and we now package and distribute products for them. This lender specialises in assisting customers who have had financial issues.

This is one area, more so in recent climates, that appears to be on the increase again and there are lenders actively looking to lend. Terms & Conditions apply and APRs will be based upon individual circumstances.

Dale Jannels - AToM director