How to get interest only with 67% LTV

Chickpeas

We currently have a tracker mortgage with Santander - interest rate 0.7%. We'd like to get an interest only mortgage now but our LTV is 67% so we don't meet the criteria for interest only. Is there any other way we can get around this ? Joint income 107k . We'd like to stick with Santander . We recently took an additional 100k to purchase a property Overseas. Current property valued at 550 and mortgage currently at 370. Do we have any chance of convincing the bank that we are low enough risk for interest only ? :j

glosoli

What would be your repayment strategy be if the mortgage was interest only?

In any case, their definition of "low risk" is a loan to value of 50% or less, so it isn't a case of convincing anyone, it simply doesn't meet their policy.

Chickpeas

We'll sell the property and move into our new overseas property which is mortagage free.

Chickpeas

Planning on about 5 years to hang onto property and then sell.

glosoli

If it goes against their criteria then there is little else that you can do other than lose your existing rate of interest and move to another lender. Outwith there being an exception, such as financial difficulty, then these things are fairly black and white.

Chickpeas

Do you think they may consider a 50/17% spilt ( so the current LTV of 67%) where we do 50% on interest only and 17% on repayment and do this for 5 years ? I'm not one to give up and will challenge the rules especially when the value of our property is that much higher than what we currently owe . We've had the mortgage for a good 12 years never defaulted and never had a bad credit rating.

haras_nosirrah

Chickpeas wrote: »

Do you think they may consider a 50/17% spilt ( so the current LTV of 67%) where we do 50% on interest only and 17% on repayment and do this for 5 years ? I'm not one to give up and will challenge the rules especially when the value of our property is that much higher than what we currently owe . We've had the mortgage for a good 12 years never defaulted and never had a bad credit rating.

But at 0.7% they aren't making money from you so it is in their interest to lose you as a customer so they can lend that money back out at a higher interest rate. They won't be falling over themselves to keep you

glosoli

You can challange the rules but they will probably just say that your house value isn't high enough unfortunately. It would either have to be valued at £740,000, or you brought the balance down to £275,000 which is 50% of your current estimate.

Chickpeas

Hmm ok I see your point. Is it at all likely they would give us a 'sabbatical' of 5 years or would they not entertain that ? I suppose I'm asking if it's worth asking them or not ? If we produced a budget to prove our living expenses were going to be higher than our income ( need a few years off to go and look after elderly parents overseas, would then have 2 lodgers in the house to cover the mortgage) which would support the rationale for the interest only ?? Is this worth the effort ? We don't want to have to lose our current mortgage product if we can help it but will have to source another product if Santander doesn't agree.

glosoli

In any case, banks know that there are millions of interest only mortgages out there that are due for full repayment prior to 2020, expect a lot of news coverage over the next 2 to 3 years. There are very strict rules for a reason r.e interest only.

amnblog

Your Lender will have communicated their rules on interest only to the Regulator.

They have no mechanism to alter them for an individual client.

In your case they should allow you to have £225,000 on interest only and the balance on capital repayment. (assuming your valuation figure is correct)