Woolwich has announced that all mortgages taken out above 75% LTV will now have to be on a capital repayment basis only, as part of a raft of changes to its interest-only deals.
From 25 October, Woolwich will no longer allow borrowers the ability to have part repayment and part interest-only deals above 75% LTV. It will also carry out random checks to make sure that valid repayment vehicles as cited on the application are in place.
In addition, Woolwich will now calculate affordability for interest-only deals over a term of 25 years or until the main income earner reaches 70 or retirement age, whichever comes first.
The repayment vehicles that Woolwich will now accept include existing endowment policies, existing stocks or share ISAs, existing unit trusts, and existing investment plans or bonds.
It will also allow the sale of the mortgaged property, up to a maximum LTV of 66% with at least £150,000 equity.
Barclays said it was making the changes in to protect its customers' long-term interests
A statement from Barclays said that it believed interest-only deals had a place for certain types of borrowers, but it may no longer be an appropriate option for many people.
It attributed this to historic low interest rates affecting mortgage affordability and potential returns on investment vehicles, alongside uncertainty over future house price movements.
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