Natwest suspends interest only mortgages
Natwest is the next of the major high street lenders to make changes to their interest only lending, temporarily suspending their interest only products this week. As of the 23rd March, the bank intends to completely cease lending on an interest only basis, reintroducing selected products again next week.
With new research indicating that a vast number of customers currently on interest only mortgages will not be able to pay back their full capital investment once their mortgage matures, most high street lenders have been forced to cut back on their interest only mortgages, making tighter restrictions on the products which are left. This means it is now more difficult to get an interest only mortgage than most other kinds, including contractor mortgages. Some lenders will only accept interest only applications if the borrower has at least a 50% deposit to put down on the total value of the property, whilst others require proof of a repayment vehicle which has been set up and already started to receive payments before they will consider lending.
Customers already on interest only mortgages will generally find that their mortgages are unchanged, although they may be required to prove that they are on target to pay back the full loan once the mortgage matures, and may need to go through more thorough checks with their banks. For those that are concerned, experts are suggesting switching to a full repayment mortgage to be safe, and to ensure that paying off the full loan amount is a viable option once the repayment term is up.
Natwest have released a statement, stating that their newest move is in line with the rapidly changing market conditions and that none of their repayment options have been affected. A number of existing mortgage products are to be moved to full repayment basis only, whilst other interest only mortgage products will be discontinued altogether. Other banks that have changed their interest only lending in the past few weeks include Santander, Halifax, Leeds BUilding Society, Yorkshire Bank, Nationwide and Coventry Building Society.
The best advice for those looking to take out a mortgage in the current climate is to always opt for a full repayment option first. There are so many deals and discounts available for first time buyers, and a whole other range of deals for other customers that everyone should be able to find a mortgage type that works best with their financial situation.
Article by: Jonathan Veers, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager.
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